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is surging following its announcement that it will buy back $500 million in shares and debt. While the move is, of course, a positive for shareholders, analysts hope it doesn't deter the company from making acquisitions to bolster its digital strategy.

About $300 million of the funds will be used to repurchase shares, while $200 million will go toward retiring a portion of senior notes.

GameStop previously completed a $300 million share repurchase program during its second quarter. Generally companies buy back stock when they believe share price is a bargain.

"We had expected an announcement like this early next year, so

this announcement comes sooner than anticipated," Sterne Agee analyst Arvind Bhatia wrote in a note. "We think it shows management is truly committed to share/debt buybacks and expect such buybacks to be annual events."

GameStop has previously said that its goal is to increase return on investment capital to 17% from 13% over the next four years through a combination of increases in operating income and a reduction in invested capital.

While investors are praising GameStop's decision, with the stock gaining 5.6% to $19.63 in morning trading, analysts also hope the company also continues to search for acquisition opportunities. "The company has already made overtures towards the oncoming secular shift to digital downloads, but it is our belief that more, be it organic or through acquisition, should be done," Needham analyst Sean McGowan wrote in a note.

--Written by Jeanine Poggi in New York.

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