Activision shares retreat in premarket trading after 2Q revenue, 3Q outlook disappoint

Ahead of the Bell: Activision Blizzard

NEW YORK — Shares of Activision Blizzard Inc. slid in premarket trading Friday after the video game publisher reported second-quarter revenue and a third-quarter outlook below Wall Street’s expectations.

Activision, which publishes wildly popular games such as “Call of Duty: Modern Warfare 2″ and the “World of Warcraft” series, said weaker than expected sales of games it launched during the quarter, along with the effects of the stronger dollar, hurt the quarter’s results.

“‘Blur’ was likely the most disappointing, as Activision’s attempt to enter the racing genre was a bonafide flop,” wrote Kaufman Bros. analyst Todd Mitchell in a note to investors.

Even so, Mitchell said “investors should note that Activision’s digital business continues to grow rapidly.”

For the first time, Activision said sales through online channels — such as downloads, sales of digital add-on content for games and subscriptions — surpassed retail sales in the second quarter.

Though its outlook for the current quarter was well below analysts’ forecasts, Activision reaffirmed its guidance for the full year, based largely on its expectation that “Call of Duty: Black Ops” will do well.

Mitchell kept a “Buy” rating on Activision.

“Negative trends are likely to continue, but we would argue investors are looking at the industry wrong,” he wrote. “Gaming remains second only to social networking in eyeball hours.”

Wedbush Morgan’s Michael Pachter said he also remains positive on the stock, but he said “the company

After a shake-up at Infinity Ward, the studio behind “Modern Warfare 2,” ousted the studio’s top executives and led many staffers to leave, “Black Ops” is being developed by Treyarch, a studio behind some of the less successful games in the franchise.