While December is the giddy season for console makers, in January, video-game makers are king.
stock was lifted on investors' shoulders in Thursday trading, thanks to several pieces of jubilant January news. Electronic Arts finished much higher, closing up $5.69, or 12%, to $52.94.
According to the most recent
research on video-game retail sales, Electronic Arts saw a 42% jump in January 2001 sell-though dollars over January 2000.
January is typically a kind month for video-game makers. "If you think about it, all the owners of those new consoles that got bought in the fourth quarter didn't become active consumers of software until Dec. 25," said John Taylor, a video-game industry analyst at Portland, Ore.-based
According to Taylor, that 42% sell-through figure includes some inventory backlog. But he said that Electronic Arts recently indicated it had to reship almost all of its titles in January, meaning retail channel shelves cleared in January.
As recently as Jan. 30, Electronic Arts worried investors with a dour third-quarter report detailing a dismal December.
Contributing to the cheeriness about January's improved environment, No. 3 independent video-game creator
announced fourth-quarter earnings that waltzed past Street estimates by a nickel, coming in at 99 cents a share. (Taylor rates both EA and THQ market outperform and his firm hasn't handled banking for either company.)
The report sent THQ higher, closing up $2.47, or 8.7%, to $30.88.
On THQ's 2 p.m. call, CEO Brian Farrell outlined his company's 50% year-over-year revenue growth, with $190.9 million in revenue for the quarter ended Dec. 31. He also played up titles other than THQ's bestseller "WWF Smackdown," indicating that the company will decrease its reliance on the blockbuster that currently provides 50% of its revenues. THQ also has a few new platforms for its wares to look forward to, as the PlayStation 2 device continues a broader rollout, joined by anticipated debuts of the
Nintendo Game Boy Advance
(expected June 11, 2001),
Not that the industry's PlayStation 2 woes are over. Farrell agreed that the shortage-plagued PlayStation 2 rollout remains "sloppy, based on the way the hardware is flowing into the country. THQ released its first title for the PlayStation 2 in the fourth quarter. And while Sony has tried to meet the demand for PlayStation 2 consoles, analyst Taylor says the market for PlayStation 2 games is still hindered by the "uncertainty of quantity and reliability of shipments" of the machines. While the question marks for 2001 remain, Electronic Arts investors will always have January.