Activision

(ATVI) - Get Report

repeated a pattern set by its rivals by offering a

mixed quarterly report on Thursday. But investors focused on the positive on Friday, bidding up shares of all the large video game software publishers.

In recent trading, shares of Activision were up nearly 3%, as were shares of

Take-Two Interactive

(TTWO) - Get Report

. Shares of

Electronic Arts

(ERTS)

,

THQ

(THQI)

and

Atari

(ATAR)

were trading 2%, 3% and 4% higher, respectively.

In its report Thursday, Activision nominally topped fourth-quarter earnings expectations but lowered its outlook for the current quarter. Despite the mixed report, sell-side analysts largely cheered the results in reports issued Friday.

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Most seemed to look past the disappointing near-term guidance and focus on the fact that the company's full-year outlook was in line with expectations. The decreased guidance for the first quarter was largely due to "external" factors, analysts noted, such as

Sony

(SNE) - Get Report

pushing back the launch of its PlayStation Portable handheld in Europe and the delays in the release of

Madagascar

and

Fantastic Four

, movies on which Activision is basing games.

"We believe that management's guidance is conservative, and believe that Activision is well positioned to deliver upside to its

fiscal 2006," said Michael Pachter, an analyst at Wedbush Morgan Securities, in a report Friday.

Pachter, whose firm has not done any recent investment banking for Activision, reiterated his buy rating and $22 price target on the company's shares.

Meanwhile, looking at this past quarter's results, analysts praised the company for topping expectations. Activision's revenue for the quarter came in $48 million, or about 31%, higher than consensus forecasts, and the company topped earnings estimates by a penny a share.

"Activision reported a solid quarter," said Bear Stearns analyst R. Glen Reid in his own report on Friday. "The company is executing well with its premium pricing strategy, strong sales of catalog titles, and increasing international penetration."

Reid, whose firm has not done any recent banking business for Activision, reiterated his peer perform rating and $16.50 price target.

The sell side largely ignored the fact that the company beat earnings expectations largely because investment income outweighed an operating loss in the quarter. And they generally overlooked the fact that quarterly profit fell 46% from a year earlier.

At least some analysts, though, did see some negatives. While executives at THQ and EA predicted that game prices will decline this year, Activision officials were much more bullish on pricing, noted American Technology Research analyst P.J. McNealy, in a report Friday. But like its rivals, Activision is now predicting that the bulk of its sales will come in the second half of its fiscal year.

With a console transition under way, results from Activision and its rivals are likely to be volatile and unpredictable, said McNealy, whose firm does not do investment banking. Delays in hardware shipments or other factors could seriously affect results, he said.

The shift in the PSP and movie release dates "is typical of some of the issues that ATVI and the rest of the sector will be facing," he said, maintaining his hold rating.

In recent trading, Activision shares were up 39 cents, or 2.6%, to $15.42.