Disappointment Over Microsoft’s HALO 3 Day One Sales? (MSFT, GME, ERTS, TTWO)

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We all know about the incredible hype and demand for Microsoft’s (NASDAQ:MSFT) monster release of HALO 3 from Bungie Studios.  The figure that is being thrown out is roughly $170 million in the first 24-hours in HALO 3 sales.  This one had 1.7 million pre-orders for the three game versions.  This should have launched last Thursday at midnight and they could have tallied up a monster number for the weekend instead of just one day.  By the way, there is no way to say "just" when you look at the one day numbers.

There is no reason to put the $170 million opening number as anything shameful.  For a product this kicks you know what, and big time.  That blows doors on movie releases.  In my late-thirty-something mind I almost calculated movie tickets at the $5.00 level and then at the $8.00 level, but then I thought of New York and Chicago where $10.00 is quite the norm (if that went up in the last few months, well sorry..).  So at the full-ticket price a $170 million one-day debut would be 17 million top-end movie tickets at full tilt.  At a $59.99 base price to fully dilute the premium packages, which isn’t fair at all might I add, for all practical purposes is 2.8333 million copies rang up at the registers; and if you take the 20% hype-launch premium for a smoothing out through time then you’d have roughly 2.36 million units after you deduct a premium sale feature.

Regardless of what median game price you use on to of the $59.99 basic game price, this is massive.  The numbers speak for themselves.  I could say I wanted to see a break above this $200 million mark that some Wall Street analysts wanted to see on the first day.  But this number is massive, even if I would liked to have seen that.  The logical trade would have been to expect some profit taking in GameStop (NYSE:GME) shares after the massive price appreciation into this release.  It somehow managed not to happen if you can believe it.

The Master Chief is kicking serious @$$ and it is hard to argue that this won’t be a driver for a little longer.  We noted previously that 2008 compared to 2007 is going to be almost impossible to reach the growth rates of 2007 compared to 2006.  That hasn’t changed.  We still expect GameStop will probably issue upside guidance for one quarter and maybe even another.  But excessive stock price moves for equity investors ultimately answer to the dark side.

If you review our full video game coverage sector you’ll see we’ve been a proponent on GameStop for quite a long time.  There is almost no way their guidance could be bad.  But we are also realistic on the money side of investors.

As far as Microsoft stock goes, how about a new mascot.  Maybe a bad @$$ helmeted soldier isn’t an appropriate icon for most corporate office suite software packages.  But it is for at least a temporary period.  Once again, Microsoft needs to change its stock nickname from "Mister Softie" to the new and improved "Master Chief" from now on.

As for the rest, time to play….  Trivia question: What is more Fun? Covering the stock market or playing HALO????

Jon C. Ogg
September 27, 2007

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