Activision Blizzard Inc.  (ATVI) - Get Activision Blizzard, Inc. Report shares traded sharply higher Wednesday after the video game maker unveiled a stock buyback and cost cutting program that offset a weaker-than-expected profit outlook for what the company called a "transition year" in 2019.

Activision Blizzard posted modestly stronger-than-expected fourth quarter profits after the close of trading Tuesday, with adjusted earnings of $1.28 per share, around a penny ahead of Street forecasts, on sale of $2.84 billion that missed analysts' forecasts. Activision said it sees adjusted 2019 earnings of $2.10 per share, and sales of around $6.3 billion, both of which were well shy of Wall Street forecasts. 

However, the market impact was muted to a degree by Activision's plans to purchase $1.5 billion worth of stock and cut 800 jobs -- around 8% of its total workforce -- as it shifts resources to game development.

"Our 2019 outlook assumes that we will not improve in-game monetization as quickly as we would like, and that it is a transition year where we have less new major content to release than we should," chief operating officer Cody Johnson told investors on a conference call late Tuesday. "So we have worked with our new business unit leaders to undertake a comprehensive examination of our business to determine the changes we need to make to improve execution and capitalize on the substantial long-term growth opportunities for our company."

"We've determined that we need to refocus our best resources on our biggest opportunities and to remove an unnecessary level of complexity and duplication that is built up in certain parts of the business," he added.

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Activision shares were marked 7.8% higher in early Wednesday trading to change hands at  $44.91 each, a move that would still leave the stock down nearly 37% over the past six months.

Activision said that it would increase development investment in its most popular games in 2019, with the number of developers working on Call of Duty, Candy Crush, Overwatch, Warcraft, Hearthstone and Diablo increasing by about 20% this year.

To fund those investments, Activision will cut back on investments in other games and reduce costs across the company and integrate various divisions, an apparent reference to layoffs that was reported by Bloomberg last week. On the call, the company said those layoffs will amount about 800 positions. Those restructuring moves will cost the company a GAAP-only pre-tax charge of about $150 million, most of which would be incurred this year.

Analysts at Credit Suisse think that Activision's retrenchment will likely mean free-cash flows will start picking up again in 2020, "given the usual 18-24 month minimum (particularly for Blizzard) game development cycle ... as the company begins to reap the fruits of its investments and the release slate becomes more robust."