By Malathi Nayak

SAN FRANCISCO, Nov 6 (Reuters) - Video game publisher Activision Blizzard Inc, known for its "Call of Duty" franchise, said it raised its 2013 forecast but lowered its revenue estimates for the current quarter after warning that it could face a challenging holiday period.

The company's stock dropped 2 percent in late trade from a close of $16.53 on the Nasdaq.

Despite a bump in its 2013 forecast, Activision "cautioned that there is some execution risk in Q4," Benchmark Company analyst Mike Hickey said.

For the fourth-quarter, which is its crucial holiday period, Activision lowered its non-GAAP revenue forecast to $2.22 billion from its prior expectation of $2.25 billion. This fell short of Wall Steet's estimate of $2.29 billion, according to Thomson Reuters I/B/E/S.

It also lowered its non-GAAP earnings per share to 72 cents from a previous range of 76 cents to 79 cents per share, and below Wall Street's view of 79 cents, according to Thomson Reuters I/B/E/S.

The company had said last quarter that it expects a rocky holiday quarter because of heavy competition as its just-launched "Call of Duty: Ghosts" will battle rival Electronic Arts Inc's "Battlefield:4."

Moroever, its "Skylanders SWAP Force", a children's fantasy-adventure game sold with actual toys that come to life onscreen is competing with Disney's "Infinity", based on a similar concept.

"Not being more specfic in terms of quantifying what is a growth opportunity" in coming quarters "was a slight disappointment," Hickey said.

RAISES 2013 OUTLOOK

Activision, which closed a $8.2 billion deal last month to buy back most of its shares from French media conglomerate Vivendi, said on Wednesday that it expects GAAP earnings per share of 83 cents in 2013, compared to its previous forecast in the range of 80 cents to 82 cents.

It also raised its estimate for 2013 GAAP revenue to $4.32 billion from $4.31 billion.

"Our overall comfort with the market" before the launch of Sony Corp's PlayStation4 Microsoft Corp's Xbox One consoles in coming weeks moved the company to raise its 2013 forecast, Chief Executive Bobby Kotick said in an interview.

"We feel like even with all the volatility of the new console launches, we have a pretty good view into what's likely going to happen and we are confident about our business," Kotick said.

The Santa Monica, Los Angeles-based company said its revenue and income fell in the third quarter.

On a GAAP-basis, revenue dropped to $691 million from $841 million a year ago and net income also fell to 5 cents per share from 20 cents per share, in the year-ago period. But results surpassed Wall Street analysts expectations of revenue of $589.4 million and earnings per share of 3 cents, according to Thomson Reuters I/B/E/S.