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TheStreet Open House

GameStop Widens Generation Gap

In its earnings report, GameStop disclosed weaker-than-expected sales of new games in November. The company attributed that fact to game enthusiasts saving up for the Xbox 360 and to bargain hunters buying used video games.

GameStop expects to continue to see strong sales of used games in the rest of the quarter. The company sold out of its initial shipment of Xbox 360s, and expects to receive another allotment of the consoles next week, but executives had little insight into how many of the devices the company will receive in the near future, according to analyst reports.

The company now expects same-stores sales, which compare results of outlets open more than a year, to be between flat with last year's results to up 2%. Previously, the company had predicted comparable-store sales to grow 8% to 10% in the fourth quarter.

GameStop also attempted to rein in bottom-line expectations, reducing the top of its forecasted earnings range for the fourth quarter. The company now expects to post a profit of 98 cents to $1.02 a share; previously, it had predicted a range of 98 cents to $1.06 a share.

Still, the bigger impact could well be on the game publishers. Many have been investing heavily in games for the next generation of software consoles. Few expected large immediate returns on those investments, but many had hoped that sales of games for current consoles and for new handheld machines such as Sony's (SNE) PlayStation Portable would be able to help tide them over until sales of the next-generation games picked up.

Instead, the opposite could well be occurring. If GameStop is an indication, Microsoft seems to be shipping far fewer of the Xbox 360s than expected in the near term. Because software sales are largely tied to the sale of hardware, the slow pace of the Xbox 360 rollout could mean that software publishers have to wait longer to see significant returns on their next-generation investments.

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