In yet another sign that the video game sector is one of the few areas of solace for tech investors, game software publisher

Activision

(ATVI) - Get Report

reported earnings that blew past both consensus and its own raised guidance for its fiscal first quarter 2003.

Activision shares closed the day up 53 cents, or 2.20%, to $24.60. Itgained another $1.06, or 4.31%, to $25.66 in after-hours trading after the company reported earnings.

Games based on the

Spiderman

cartoon character and on skateboarder Tony Hawk helped the nation's No. 2 independent game publisher report record earnings of $20.7 million, or 31 cents a share, compared with $29,000 and flat earnings in the same period a year ago.

Revenue for the quarter soared 73% year over year to $191.3 million, from $110.6 million in the year-ago quarter.

The company had raised its guidance on June 4 to 18 cents in EPS and $165 million in revenue, but it had better-than-expected sales of games in the domestic and overseas markets, where one game based on

Sony's

(SNE) - Get Report

Spiderman

movie became the best-selling game for the entire quarter, according to an NPD TRSTS sales survey. Wall Street consensus reflected the company's revisedguidance.

The company ended the quarter with $550 million in cash, which some analysts speculated would be used for acquiring smaller developers and publishers. In June it rolled out a 7.5-million-share offering to raise $248 million.

Looking ahead, the company raised its fiscal 2003 EPS guidance to $1.25 from $1.10, which is a 42% year-over-year jump from last year's full-year EPS. Activision also raised its revenue guidance to $920 million from $890 million. For fiscal 2004, the company said it plans to achieve an EPS of $1.35 on revenue of $1.02 billion.

In anticipation of guidance-busting earnings, analysts upgraded the company's rating ahead of the report. US Bancorp Piper Jaffray raised the stock to strong buy from outperform. "We believe shares of ATVI are poised for a run during the next four months," wrote Piper Jaffraygames analyst Anthony Gikas in a report earlier today. "With more than $520 million in cash, ATVI has plenty of dry powder to acquire IP, publishers and developers, in turn driving additional market share gains in the coming years."

According to NPD, the company was the No. 2 U.S. console and handheld games publisher for the quarter.