(Reuters) - Activision Blizzard Inc's quarterly sales beat Wall Street expectations on Thursday as the video game publisher lost fewer "World of Warcraft" subscribers than it did a quarter ago.
Investors are closely watching the "World of Warcraft" subscriber numbers because the franchise is the company's most profitable business and generates a steady stream of monthly revenue from its users.
The company ended the quarter with 10.2 million "World of Warcraft" subscribers, which is down from 10.3 million from the previous quarter.
The net loss of 100,000 subscribers is smaller than the 700,000 subscribers it lost during the third quarter.
Chief Executive Bobby Kotick told Reuters in an interview that Wall Street has overacted to declines in that business. He said the content update of the game in late November helped keep players on board.
"When we introduced the content patch we thought the numbers would stabilize and they have," he said in an interview.
The U.S.'s largest video game publisher now expects $4.5 billion in annual revenue in 2012 and earnings per share of 94 cents. This is slightly below the $4.55 billion in revenue analysts were expecting on average in 2012, according to Thomson-Reuters I/B/E/S.
For the first quarter, the company expects EPS of 3 cents per share on revenue of $525 million, which falls short of analysts' expectations of EPS of 14 cents per share on revenue of $771.1 million.
Activision's fourth-quarter sales for the three months ended December 30 fell 6 percent to $2.4 billion. Analysts were expecting sales of $2.2 billion, according to Thomson Reuters I/B/E/S.
Adjusted for the deferral of revenue from digital content, Activision posted a profit of $725 million, or 62 cents per share, up from $655 million or 53 cents a year ago.
This beat Wall Street estimates of 56 cents a share, according to Thomson-Reuters I/B/E/S.
The company also announced it would buy back $1 billion of its stock starting in April and that it will increase its dividend, which it will pay out on May 16, by 9 percent.
The company's shares rose 9 cents, or 0.7 percent, in after-market trading to $12.75 per share.
Reporting By Liana B. Baker; editing by Phil Berlowitz and Andre Grenon