Posts for Ticker ‘GameStop’

Nintendo Executives Follow 24/7 Wall St. (NTDOY, MSFT, SNE, GME) (7974.JP)

Just one week ago 24/7 Wall St. suggested that Nintendo (OTC:NTDOY) might try a Hail Mary Pass and offer a voucher with a guarantee if they can ramp more from manufacturing or if it can outsource more capacity.  The company launched a deal via GameStop (NYSE:GME) today for "rain-checks" so that if you pay the full console price that you can get your Wii by the end of January.  Hmmmmm, sounds awfully familiar….. 

If you look at how strong the data is you’d wonder how many Wii systems Nintendo could have sold if it actually had them in stock. The NPD data for the latest release shows the following console sales for last month:

  • Nintendo Wii at 981,000 units;
  • Microsoft Xbox 770,000 units;
  • Sony PS3 440,000.

We noted how American consumers are impatient, but this might just satiate at least some of the demands.  This is actually a pretty good number for Microsoft (NASDAQ:MSFT) but shows that Sony’s (NYSE:SNE) PS3 is a dud and still considerably underperforming.

Jon C. Ogg
December 14, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: December 14, 2007 – 1:14 pm in Video Games, , , , , , , ,

GameStop’s ‘New’ Competitor (GME)

It is always interesting when you see a pure-play monopoly, and out of video game stores it is arguable that GameStop (NYSE:GME) is a pure-play monopoly on a video game focused business strategy.  24/7 Wall St. is not at all suggesting antitrust issues or predatory actions or anything of the sort, because there are the behemoths Best Buy, Wal-Mart, Toys R US, online giants, and many other large stores that sell games.

But there is a company that was just noticed as having grown after looking through press releases today, and this is a company we looked at before and had forgotten about.  A company called Play N Trade put out a press release about the winner of its Halo 3 tournament, but it was a little surprising how fast the company has grown and more importantly how much it wants to grow.  It claims 95 video game stores currently, but it says that it has sold more than 400 franchises.  On the store location site, we counted over 100 stores for Play N Trade that were either open or coming soon.  Its website has the goal of reaching close to 200 stores by the end of 2007 and a national presence of 1,000 stores in the next 3 years.

GameStop operated some 5,000 stores as of last look.  So this is not even 1/10 the size of the video game giant the merged Electronics Boutique with GameStop stores into the largest pure-play video game retailer out there.  You can also be sure that GameStop will grow its store count in the U.S. and much more internationally while Play N Trade is on its growth plans. 

Play N Trade’s "investment required" is listed as $125,000 to $150,000 on the Franchise.com web site, although the "investment required" for most franchises is usually not the full costs for running a business to success.  GameStop’s market cap is just under $9 Billion, which gives it a value of $1.8 million per store if you discount the online sales and the content sales etc.

Its doubtful that GameStop will even notice this in the immediate future, but this could be an issue that GameStop at least notices when the next generation of video game consoles start coming to market…. in a couple years or more.

Jon C. Ogg
November 8, 2007

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

GamestopVS

.Playntrade_2

Posted on: November 8, 2007 – 7:10 am in Retail, Video Games, , ,

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

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

Posted on: September 26, 2007 – 11:20 pm in Video Games, , , , , , , , ,

Halo’s Next Generation (or Halo 4) Already Guarded (MSFT, GME, BBY)

The lines are out.  The costumes are on.  Halo 3 is on imminent release.  10 minutes for the east coast.  Halo 4, or the next version/series of Halo, is already under development.  Have I been told so? NO.  Have I been told the opposite?  YES.  Do I believe this is the end? Hell No!

Predicting sequels and predicting the outcome of a mega-hit series is pretty easy if you merely follow the money.  I have no idea of the outcome of Halo 3 beyond the reviews….. Yet.  But I can follow the money, and that is simple.  There will be more Halo "money" for Microsoft (NASDAQ:MSFT).  GameStop (NYSE:GME) and Best Buy (NYSE:BBY) will be banking on it.

I have no clue if Master Chief or the Arbiter make it out of this "last" episode alive.  I would predict the Arbiter bites the dust and takes it for the home team, and Master Chief either lives or is questionable.  But….. IT DOESN’T MATTER……. This is Sci-Fi and way out into the future.  As long as some remnant of DNA exists these soldiers can be brought back.  And even then, more powerful foes and entirely unknown foes of yet can surface.

This was supposed to be Microsoft’s foray into profitability in the entire Xbox franchise. They aren’t about to permanently kill off the ticket in the bread line.

Maybe it’s the Master Chief.  Maybe it’s the Arbiter.  Hell, Maybe they both die.  It doesn’t really matter.  Follow the money!!!!!

Regardless, "Finish The Fight" can not be finished yet.

OK, I have to go get my copy of the game.

Jon C. Ogg
September 25, 2007

Posted on: September 24, 2007 – 11:02 pm in Video Games, , , , , , , , ,

Halo 3: T-Minus Two Weeks (MSFT, GME, TTWO, ATVI, ERTS)

Master_chief_picIn just under two short weeks the gaming event of 2007 will take place: Microsoft’s (NASDAQ:MSFT) Halo 3 hits the shelves.  Halo 3 will launch on September 25, 2007, and this will be a key date for investors that watch video game publishers and sellers alike. 

With September 25 falling on a Tuesday you can bet that schools (and tech support departments) around the U.S. are probably going to have record absentees.  "I can’t come to school today, because I have Arbiter’s flu and the Covenant just has me worn out."  Sure, certain public beta demos have been out for testing and for introduction for a while, but this game already has recorded 1 million copies in U.S. pre-sales and it’s a safe bet that almost every Xbox 360 owner will buy a copy of this game between now and early 2008. 

It’s not really released how many copies of each version were sold or are being made available, but here is what is coming out:

  • The LEGENDARY edition for $129.99 with a collectible helmet case and bonus disks with supplemental content.
  • The Halo 3 Limited edition for $69.99 will have a hard sleek metal cover and a bound collection of information and art plus a bonus disk.
  • The standard edition for $59.99 is likely to be the biggest seller.
  • Of course there is also the OFFICIAL STRATEGY GUIDE for $19.99.
  • For the true enthusiasts, there is even the Xbox 360 Halo 3 Special Edition Console for $399.99.

After the recent Xbox recall gaffe, the Bungie games and Xbox unit needs a blockbuster.  This was the year that the entire Xbox venture was supposed to become profitable, but the charges took care of that.  Also, what about that darned Halo-based movie (and is this a real pre-preview)?

GameStop (NYSE:GME) has to be happiest about one thing: there’s no Chinese lead paint in video games.  Take-Two (NASDAQ:TTWO) already got its bad news out of the way after it delayed its release of the new Grand Theft Auto franchise game until 2008.  Now it looks like it will just be Halo 3 that creates a vacuum for other gaming companies in a couple weeks.

If you are Activision (NASDAQ:ATVI) or Electronic Arts (NASDAQ:ERTS), you might want to wait until after the first week of October before making any major release announcements.  Companies that make video game announcements around that time will not get heard.  GameStop Corp. (NYSE:GME) shares closed up 2.8% today at $50.18, just over 3% from the all-time highs of $51.99.

Hopefully this will help Microsoft (NASDAQ:MSFT) finish its own fight.  Microsoft’s stock should no longer be called "Mister Softie."  It’s new nickname should be "Master Chief."  If you want all the last minute news on it, you can access the Xbox.com site here.

What would a spin-off of Bungie and Xbox be worth to Microsoft shareholders?  It doesn’t matter because it almost certainly won’t happen, but it would be an interesting exercise.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

*IMAGE PROVIDED BY BUNGIE STUDIOS.

Posted on: September 11, 2007 – 5:46 pm in Video Games, , , , , , , , ,

GameStop’s New Highs After Earnings & Guidance (GME)

GameStop (NYSE:GME) is trading up 7% pre-market on what will be new yearly highs and all-time highs after posting earnings.  A quick summary is $0.13 EPS  on revenues of $1.3382B versus $0.09/R$1.2B estimates (prior guidance was only $0.06 EPS).  It now sees comparable sales up 30 to 32% and issued next quarter guidance of $0.19 to $0.21 EPS versus 0.18 estimates and raised its annual guidance.

Total sales increased 38.9% to $1,338.2 million in comparison to $963.3 million in the prior year quarter. Comparable store sales increased 29.1% during the second quarter, also beating previously released guidance of 16.0% to 18.0%. During the second quarter, new video game software sales surged 49% and new hardware sales soared 87%.  GameStop surpassed the 1,000 store count internationally and said it is on the way to achieving its forecast of opening between 500 and 550 new stores during the year.

RAISED GUIDANCE: For Q3 2007, GameStop is forecasting comparable store sales to range from +30.0% to +32.0%. Diluted earnings per share are expected to range from $0.19 to $0.21 (compared to $0.18 est.).  Due to strong Q2 it is raising full year 2007 diluted earnings per share guidance to range from $1.45 to $1.48; and revenues are now projected to grow between 20.0% and 22.0%, with expected comparable store sales ranging from +15.0% to +17.0%.

GameStop has to be loving the Wii.  The top selling video games during the quarter were GUITAR HERO II from Activision, NCAA FOOTBALL ‘08 by Electronic Arts, MARIO PARTY 8 by Nintendo, Nintendo’s POKEMON DIAMOND and PEARL, and FORZA MOTORSPORT 2 from Microsoft.  Also on deck for the coming quarter is Halo 3 sales, and it appears that over 1 million copies have been pre-sold from video game retailers in the U.S. alone.

GameStop’s prior high is $44.76 on a split-adjusted basis, and shares are up around $46.00 pre-market.

Jon C. Ogg
August 23, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 23, 2007 – 8:02 am in Earnings, Video Games, , , ,

Grand Theft Auto Delay Bad For Take-Two, Good For Other Game Publishers (TTWO, MSFT, ERTS, THQI, ATVI, GME)

Take-Two Interactive (NASDAQ:TWO) is showing how its woes are far from over.  The company is lowering guidance because it delayed the launch date for its upcoming blockbuster game Grand Theft Auto 4.  The company says additional development time is required to complete the title.  Hopefully, if Take-Two doesn’t want there name to be "took-none," they aren’t developing any more "Hot Coffee" scenes.  This GTA title is now being delayed to fircal 2008 instead of calender Q4 2007. 

Take-Two is also delaying its Manhunt 2 for PS2, PSP, and the Wii.   The losses now look large, quite large.  The company says it is in sound financial position, but they just now irritated shareholders and clients.  Investors who jumped in hoping that the new team was going to do a full takeover probably wish by now that they would have played a stock by the name of Forrest Gump’s fruit company.

There is always some good news, and this is the case for the rest of the sector.  Microsoft’s (NASDAQ:MSFT) Halo 3 is going to set records for game releases.  GTA was set to be another major blockbuster coming out right after Halo 3.  In short, Electronic Arts (NASDAQ:ERTS), THQ Interactive (NASDAQ:THQI), and Activsion (NASDAQ:ATVI) may have just gotten one monkey off their backs.   Activision (NASDAQ) just released earnings and is trading up about 1% on "Guitar Hero".   THQ Interactive (NASDAQ:THQI) traded higher today, but its shares are up another 1%; and Electronic Arts (NASDAQ:ERTS) is up almost 1% after a 7% rise today, despite its warning yesterday.   GameStop Corp. (NYSE:GME) isn’t faring as well since this takes out a key upcoming blockbuster title out of the Christmas season sales, with shares giving back gains today with a 3.6% drop in after-hours. 

We noted just yesterday how the sales out of the upcoming Halo 3 and GTA 4 would have acted as a suction against many of the outside game title sales for a period after those were released.  This delay of the GTA title just got rid of a monkey for the other game publishers. 

Take-Two shares are down almost $3.00 in after-hours trading down to $14.00. 

Jon C. Ogg
August 2, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: August 2, 2007 – 4:51 pm in Earnings Warning, Video Games, , , , , , , , , , , , , ,