Activision ( ATVI) on Thursday reported lower earnings and revenue for the just-ended quarter, although both were higher for its fiscal year 2003.

The company also raised its revenue guidance for the current quarter by $10 million.

The Santa Monica, Calif., video game publisher reported that net revenue for the fiscal year ended March 31 was $864.1 million, a 10% gain over 2002's $786.4 million. And net income was a record 96 cents a share, or $66.2 million, compared with $52 million, or 88 cents a share, in the prior year.

The consensus of analysts polled by Thomson First Call was for annual earnings of 95 cents a share on sales of $853 million.

Net revenue for the fourth quarter was $125 million, down sharply from the year-ago quarter, when revenue was $164.9 million. The company noted that sales for the quarter were lower partly because the company released just one title in the quarter vs. seven a year ago. Net income for the quarter was a loss of $8 million, or 13 cents per share, compared with a profit of 17 cents a year earlier. Analysts expected the 13-cent loss, but revenue is an upside surprise -- Wall Street was looking for $113 million.

Activision raised its outlook for the first quarter of fiscal 2004 to $140 million in revenue and a loss per share of a penny. The company also provided an outlook for the second quarter of $130 million in revenue and earnings per diluted share of 5 cents. The company's full-year outlook remains unchanged at $750 million in revenue and 70 cents per share earnings.

With the Electronic Entertainment Expo, or E3, the game industry's premier event, opening next week in Los Angeles, sell-side sentiment for the three major game publishers is generally positive. And shares of the three leading publishers have run up strongly since the end of February, with both Activision and THQ ( THQI) gaining 26%, while Electronics Arts ( ERTS) added 19%.

Earlier this week, Deutsche Bank Securities analyst Jeetil Patel upgraded Activision to buy from hold, "reflecting a solid start to the June quarter and improving visibility in the fiscal 2004 title lineup." Patel thinks console vendors are likely to cut prices by the end of the year, but cuts to $149 by Microsoft ( MSFT) and Sony ( SNE) for their respective platforms could happen before E3 begins in Los Angeles next week, he said. Deutsche Bank does not have a current banking relationship with Activision.

U.S. Bancorp Piper Jaffray analyst Anthony Gikas said he expects Activision to unveil strong products at E3 that will likely ease concerns over the back half of the year. "ATVI has been quietly amassing new content and publishing deals," he said in a note to clients.

Citing a number of factors, including potential for strong free cash flow and a feeling that "sector sentiment appears to have bottomed out," Gikas upgraded Activision to outperform this week. Piper Jaffray has a banking relationship with Activision.

On May 5, the company announced a 3-for-2 stock split, payable to shareholders of record as of May 16. The stock split will be accomplished through a 50% stock dividend, providing shareholders with one additional share of common stock for every two shares they hold. In lieu of issuing fractional shares, shareholders will receive a cash payment based on the average of the high and low sales prices of the common stock on the record date.

Activision closed Thursday off 50 cents, or 2.8%, to $17.57. After hours, shares were up 49 cents, or 2.8%, to $18.06.