Activision Rises after Beating Estimates, Raising Guidance - TheStreet

Shares of


(ATVI) - Get Report

rose Wednesday, a day after the video game maker beat fourth-quarter expectations and raised 2003 guidance.

Shares of Activision rose $1.46, or 4.8%, to $32.11 in recent trading. Shares of competitor

Electronic Arts


, set to report fourth-quarter and fiscal year 2002 earnings Thursday, rose even further, by $3.42, or 6.3%, to $57.40.

Bear Stearns analyst Jeffrey Vilensky upgraded his rating on Activision Wednesday to buy from attractive. In a vaguely worded disclosure, Bear Stearns reported it "may have performed investment banking services" for the company. Other analysts raised their estimates.

Activision, whose titles include Spider-Man and Tony Hawk's Pro Skater 3, said the launch of Microsoft's Xbox video game system, Nintendo's GameCube and Game Boy Advance and continued success of


(SNE) - Get Report

PlayStation 2 fueled its performance in 2002 and are expected to continue to drive growth.

Santa Monica, Calif.-based Activision reported fourth-quarter net income of $10.9 million, or 17 cents a share, compared to net income of $875,000, or 2 cents a share, the same period last year.

Fourth-quarter revenue totaled $164.9 million, 30% higher than the $126.8 million in revenue reported a year ago. Wall Street was expecting the company to report net income of 11 cents a share on $146.4 million in revenue, according to Thomson Financial/First Call.

Expecting stronger Spider Man and hardware sales, Activision raised its fiscal-year 2003 earnings guidance to $1.02 a share from 94 cents a share. The company raised its revenue guidance for the year to $870 million from $845 million, which represents 10.6% year-over-year growth. And Activision introduced guidance for fiscal-year 2004, saying it expects to earn $1.20 a share on $1 billion in revenue -- an 18% year-over-year increase in revenue.

Activision said it already has shipped 1.5 million units of its Spider Man title since its North American release April 16, before the debut of the record-breaking movie.

While analysts praised Activision for its strong quarter, U.S. Bancorp Piper Jaffray senior analyst Anthony Gikas said he continues to believe management remains "overly confident" about its fiscal year 2003 prospects.

He also said the company's projected growth in fiscal-year 2003 is the lowest in the industry and stems from a decline in Tony Hawk-branded products. Gikas rates Activision outperform, and his firm has not done recent banking for Activision.