Electronics Boutique Warns

While the fourth quarter was OK, current-period earnings will be soft.
By Troy Wolverton ,

Investors sold down shares of

Electronics Boutique

(ELBO)

Monday after the company once again sought to lower profit expectations.

The company's disappointing news was wrapped up in its fourth-quarter earnings report on Monday morning. In recent trading following the report, shares were off $2.46, or 6.2%, to $37.03.

The video game software retailer earned $38.07 million, or $1.53 a share, in its fourth quarter. That result was down from a year earlier, when the company earned $39.40 million, or $1.57 a share. The company's total revenue jumped 20.5% to $808.97 million.

The company's bottom line in its just-completed quarter included a one-time, after-tax charge of $2.7 million, or 11 cents a share, related to an accounting change. Excluding the charge, Electronics Boutique would have earned $40.8 million, or $1.64.

That was just above what analysts had projected and in line with the company's own forecast. Sell-siders polled by Thomson First Call had predicted that Electronics Boutique would earn $1.62 a share on $789.73 million in sales. In January, the company announced that its earnings would likely come in at the low end of its previously stated range of $1.62 to $1.72 a share, due to supply constraints that led to

disappointing holiday sales.

For its full fiscal year, Electronics Boutique earned $52.29 million, or $2.13 a share, on revenue of $1.99 billion. In its prior year, the company earned $45.73 million, or $1.80 a share, on total revenue of $1.60 billion.

The company also projected that its first-quarter and full-year earnings may disappoint investors. In the first quarter, Electronics Boutique expects to earn 12 cents to 14 cents a share on revenue ranging from $484.14 million to $499.04 million, or an increase of 30% to 34%. For the full year, the company forecast earnings of $2.34 to $2.44 a share on revenue ranging from $2.29 billion to $2.39 billion, or an increase of 15% to 20%.

Analysts had projected that the company would earn 15 cents a share in the current quarter on $443.28 million in revenue. For the full year, Wall Street was calling for earnings of $2.43 a share -- or 4 cents a share above the midpoint of the company's range -- on revenue of $2.29 billion.

"We believe fiscal 2006 will be a year marked by many exciting developments in the gaming industry. However, it is also likely to be a year of transition as we prepare for the launch of the next generation of consoles," said company CEO Jeffrey Griffiths in a statement.

"The first half release schedule is strong relative to last year. However, we will face tougher comparisons in the third and fourth quarters given the exceptionally strong holiday line-up in 2004. We face some uncertainty surrounding the timing of the new Xbox2 launch, which could cause our earnings estimates to shift between quarters or even years."

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