Activision Q3 Profits up on Guitar Hero, Call of Duty

Activision Blizzard announced a profit for the third quarter, thanks to two important events: a reduction in costs and strong sales of titles like Guitar Hero 5. Shares rose 2 percent in afternoon trading on the news. The company also predicted lower fourth quarter numbers than what Wall Street expected, despite the pending release of Call of Duty: Modern Warfare 2, which ships next Tuesday.

For the third quarter, Activision reported a net income of $15 million - 1 cent per share - compared with a net loss of $108 million - 8 cents a share, for the same period a year ago. Net revenue dipped 1 percent in Q3 to $703 million. Excluding revenue that was deferred from the sale of certain titles, the company said revenue for the period would have been right around $755 million.

In the quarter Activision Blizzard increased its U.S. and European share 1.2 points over the previous year across all platforms to 12.3 percent and had two of the top-10 best-selling titles in the U.S.: Guitar Hero 5 and Guitar Hero World Tour, according to retail sales data from NPD Group (U.S.) and Charttrack and Gfk (Europe).

The top selling games for the quarter were Guitar Hero 5, Marvel: Ultimate Alliance 2, and older versions of Guitar Hero, Call of Duty and - of course - World of Warcraft.

For the fourth quarter, Activision is predicting earnings of 43 cents a share on revenue of $2.22 billion, on a non-GAAP basis. Analysts were expecting earnings of 44 cents a share on revenue of $2.3 billion. The fourth quarter will include the release of Modern Warfare 2, Tony Hawk: Ride, DJ Hero and Band Hero.

Disney to acquire Marvel

The biggest story of the day, if not the month of August, is Disney Company’s announcement this morning that it has agreed to purchase Marvel Entertainment. While this will eventually have a serious impact on a whole series of entertainment properties (like several cartoon series currently running on Viacom’s Nickelodeon) the real important thing to watch is the games and entertainment sector and the contracts Marvel has with companies like Activision and THQ.

The agreement to buy Marvel Entertainment includes a stock and cash transaction, the companies announced today. Under the terms of the agreement (based on the closing price of Disney on August 28, 2009), Marvel shareholders would receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own. At closing, the amount of cash and stock will be adjusted if necessary so that the total value of the Disney stock issued as merger consideration based on its trading value at that time is not less than 40 percent of the total merger consideration. Based on that closing price, the transaction value is $50 per Marvel share or approximately $4 billion.

Under the deal, Disney will acquire ownership of Marvel including more than 5,000 Marvel characters. Ike Perlmutter, Marvel’s Chief Executive Officer, will oversee the Marvel properties, and will work directly with Disney’s global lines of business to build and further integrate Marvel’s properties. While the boards of both companies have approved this transaction, the deal is still subject to the normal regulatory approval and customary closing conditions - and the approval of Marvel shareholders.

And on a related note, Evan Narcisse has some interesting thoughts on the deal in his latest blog post - check it out.

Raven Software confirms staff cuts

Raven Software and studio owner Activision have confirmed with Shacknews that it has cut 30 - 50+ employees from its development studio in the post-development period following the release of X-Men Origins: Wolverine and Wolfenstein. While this is typical behavior for studios who finish up big projects and have nothing to keep its employees busy there has been some speculation that the layoffs may be the result of lackluster Wolfenstein sales. Tom Chick’s Wolfenstein review may have the answers to those questions - to say he felt the game was lacking would be a major understatement.

Currently the company is working on Singularity, with Marvel Ultimate Alliance 2 set to ship on multiple platforms very soon.

Activision Blizzard’s Non-E3 Line-Up

Activision Blizzard revealed its non-E3 line-up that managed to make its way into just about every one of the big three’s press conferences this week. This line-up includes Guitar Hero III: Legends of Rock, Call of Duty: World at War (which a colleague described as awesome - I’ll reserve judgment), Guitar Hero World Tour, Quantum of Solace (a new James Bond game) and Spider-Man: Web of Shadows.

The press conference did reveal a few surprises, like a new Wolfenstein game being developed by id Software, Marvel Ultimate Alliance 2, a new first person action game from Raven Software, a Luxoflux game based on the Transformers: Revenge of the Fallen film, and a game based on Marvel’s X-Men Origins: Wolverine film.

Oddly enough, Activison Blizzard’s other studios - Sierra, VU Games, and Blizzard had no announcements tonight. Weird. Check out our E3 Hub Page for the latest.