Vivendi’s 2009 Earnings Exceed Expectations

Vivendi SA SP (ADR) (OTC: VIVDY) reported its 2009 adjusted net income of 2.59 billion euros compared to the consensus estimate of 2.46 billion euros complied by Bloomberg. The company’s 2009 adjusted profit, however, registered a decline compared to the 2.75 billion euros reported in 2008.

The higher-than-expected earnings were driven by the company’s video games business benefiting especially from “Call of Duty: Modern Warfare 2” and other titles at its Activision Blizzard unit. The video-games unit, created in 2008, has grown faster than analysts’ expectations and had much stronger performance in 2009 compared to the year before, according to the company’s CEO Jean-Bernard Levy.

Conor O’Shea, an analyst at Kepler Capital Markets in Paris, said that the performance is definitely above expectations and an annual EPS decline of 8 percent is not bad for a consumer facing business.

Under Mr. Levy, Vivendi’s growth has been driven by acquisitions. The company acquired control of Brazilian phone operator GVT Holding SA for $4.18 billion last year, outbidding Telefonica SA. (ADR) (NYSE: TEF). Vivendi has also bought out minority partners in some of its main businesses. According to Mr. Levy, the company will consider future acquisitions in places of strong growth.

Vivendi’s operating profit rose 8.8 percent to 5.4 billion euros, benefiting from lower cost of sales. The company said it is expecting further growth in its 2010 operating profit, though no target was specified.

Vivendi has been locked in a lawsuit from its investors in U.S. who say the company lied about its performance under the former CEO, Jean-Marie Messier. According to the company, it made provisions of 550 million euros for potential losses from the suit.

Vivendi’s shares gained 4.2 percent in Paris on Monday, making it the biggest intraday gain in three months.