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Activision quarterly revenue tops forecasts ahead of new game releases

Trio of new game releases -- 'Destiny,' 'Advanced Warfare,' 'Skylanders' -- mark critical time for Activision

Strong online sales of "World of Warcraft" and "Hearthstone" pushed Activision Blizzard Inc. past revenue forecasts, the video game publisher said Tuesday.

The Santa Monica game developer posted a profit of $204 million in the second quarter, down 37% from a year earlier as the company ramped up marketing for new games and saw retail sales dip.

But revenue reached $658 million, up 8% from last year's second quarter. Analysts, on average, had estimated the company would post revenue of about $610 million.

The company said it paid its highest dividend ever -- 20 cents a share -- during the quarter.

The earnings report comes ahead of a critical time for Activision. It's banking on "Destiny," scheduled for release Sept. 9, to be the next mega-franchise, joining hit series such as "Call of Duty," "Guitar Hero" and "World of Warcraft." The game has been in the works for a couple of years, and Activision has planned to spend $500 million over as long as a decade to produce and market the game.

Also, a new "Call of Duty" game, “Advanced Warfare,” is due in November. "Skylanders Trap Team" is scheduled for release in October.

Activision Chief Executive Bobby Kotick said in an interview that he expects "Destiny" to sell more copies by the end of the year than any other new game franchise has in its debut. "Advanced Warfare" would be the bestselling game of the year industrywide, he added.

The trio of games has analysts and investors excited, too.

Video game companies tend to see their stock price rise ahead of new releases, and Activision has been no different. Entering Tuesday, Activision’s shares had climbed 10% over the last three months. In the early moments of after-hours trading on Tuesday, shares rose nearly 3% to just under $23.00.

Activision, one of the largest game publishers in the world, is facing stiff competition from smartphone and tablet games that are often much cheaper. The record-high 73% of sales coming from online transactions in the second quarter showed there's clear demand for content on different platforms, Kotick said.

An iPad app for "Hearthstone" has been selling well, but overall mobile sales in the second quarter fell by almost half from a year earlier to $48 million.

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