This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GameStop Posts Loss After Merger

GameStop (GME - Get Report) said third-quarter sales rose 28.2% from a year ago, but the video-game seller swung to a loss after factoring in costs associated with the Electronics Boutique acquisition.

For the quarter ended Oct. 29, GameStop's sales rose to $534.2 million from $416.7 million in the prior year. Same-store sales fell 12%, reflecting last year's release of Grand Theft Auto: San Andreas from Take-Two Interactive (TTWO - Get Report) and Fable from Microsoft (MSFT - Get Report).

GameStop lost $2.5 million, or 4 cents a share, in the quarter. The bottom line includes merger costs of $11.9 million, or 19 cents a share, along with hurricane-related losses of 1 cent a share.

Excluding the items, the company would have earned about 16 cents, topping Wall Street's consensus profit target of 14 cents. A year ago, the Grapevine, Texas, company earned $12 million or 21 cents a share.

"During November we experienced weaker-than-expected new video-game software sales mainly due to core customers waiting for the launch of Microsoft's Xbox 360 and to value consumers continuing to gravitate to used video games," GameStop said in a statement Tuesday. "We anticipate this trend to continue to a degree throughout the holiday season, with gross sales levels declining, but strong margin contributions supporting forecasted earnings."

The company said its only concern is that the total number of Xbox 360s sent to retailers at this point is "far less" than it had anticipated. "While we expect to be supplied throughout the holiday season, the exact quantities to be shipped are not yet clear," the company said.

GameStop expects comp sales in the fourth quarter to range from unchanged to up 2%, citing supply limitations of the Xbox 360 and weaker-than-expected new game sales in the first three weeks of November. Microsoft has said it won't immediately flood the market with its new console but will instead use a "rapid replenishment program."

Still, used game sales continue to meet the company's goals, and it's forecasting fourth-quarter earnings of 98 cents to $1.02. GameStop projected fiscal-year earnings of $1.65 to $1.70. The guidance doesn't include merger expenses.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
GME $39.17 0.00%
MSFT $48.66 0.00%
TTWO $24.36 0.00%
AAPL $129.66 3.60%
FB $79.58 1.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs