GameStop Corp forecast a bigger-than-expected drop in same-store sales for the crucial holiday quarter, and the company said it expected revenue from its business of selling videogames to largely decline during the period.
The company, the world"s largest retailer of video games, has been struggling as more players switch to downloading games on their consoles from buying physical copies.
Revenue from the videogame category, which includes new hardware, software and accessories, is expected to decline in double digits in November and by single digits in December, Chief Operating Officer Tony Bartel said in an interview on Tuesday.
Bartel said the company expected revenue from the business to be flat to positive in January.
He also said sales of Activision Blizzard"s latest "Call of Duty" game would be lower than a year earlier.
GameStop also forecast total sales to decline between 5-10 percent in the current quarter, translating into revenue of $3.17 billion-$3.35 billion.
Analysts on average were expecting revenue of $3.45 billion, according to Thomson Reuters I/B/E/S.
However, GameStop"s shares gained 2.1 percent to $24.61 in after-market trading as the company maintained its full-year profit forecast.
Bartel said the company expects to expand its operating earnings by diversifying its portfolio.
Under Chief Executive Paul Raines, GameStop has been expanding its digital and mobile offerings and snapping up technology brand stores that sell mobile phones and other electronic devices.
Revenue in its technology brand business rose 54.4 percent in the third quarter from a year earlier.
The company said it expected sales at established stores to decline between 7 percent and 12 percent in the fourth quarter, much bigger than the 7.1 percent fall analysts were expecting, according to research firm Consensus Metrix.
GameStop"s net income fell to $50.8 million, or 49 cents per share, in the third quarter ended Oct. 29 from $55.9 million, or 53 cents per share, a year earlier.
The company"s net sales fell to $1.96 billion from $2.02 billion, the third straight quarterly decline.
Excluding items, GameStop earned 49 cents per share, beating analysts" estimate of 47 cents.
The numbers were in line with the company"s preliminary estimates released earlier this month.
(Reporting by Anya George Tharakan in Bengaluru; Editing by Sriraj Kalluvila)
Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.
GameStop DOOMED? Blame Call of Duty: Infinite Warfare! - The Know Game News
Last week, we had earnings from Chinese media giant, SINA Corp. SINA as well as video game retailer GameStop Corp GME . We also had Microsoft Corp MSFT bringing its very famous PC game, Solitaire to iOS and Android operating systems.
Recap of the Developments
1. Earnings
SINA reported third-quarter 2016 non-GAAP earnings of 56 cents per share, up 43.6% year over year. Net revenue of $274.9 million topped the consensus mark of $255.3 million and increased 21.5% year over year. Advertising revenues moved up 21% year over year to $233.6 million. The upside was primarily driven by strength in advertising related to Weibo (WB). Weibo revenues surged 41.8% year over year to $176.9 million. Monthly active users went up 34% year over year to 297 million. Daily active users were 132 million at quarter-end, up 32%. The strong growth momentum of Weibo advertising was driven by increasing adoption of mobile devices (89% of MAUs were mobile users) and improved monetization.At present, SINA carries a Zacks Rank #1 (Strong Buy).
GameStop"s third quarter fiscal 2016 adjusted earnings per share of 49 cents in the quarter beat the Zacks Consensus Estimate but revenues of $1,959.2 million missed the same. On a year-over-year basis, the metrics fell 9.3% and 2.8%, respectively, primarily due to weakness in sales of video game hardware and software. Management gave a bleak outlook for the fourth quarter, which comprises the very important holiday season. Management projected sales in the quarter to decline in the range of 5% to 10%. At present, GameStop carries a Zacks Rank #4 (Sell).
2. Reportedly, Microsoft is bringing its well known PC game, Solitaire to mobile phones on both Apple"s iOS and Alphabet"s GOOGL Android platform. The Solitaire Collection will include popular versions like Pyramid, Klondike, Spider, FreeCell and Tripeaks. The premium edition of the game will be priced at $1.99. Also, as per The Verge, Microsoft will be incorporating Xbox Live into the game, enabling users to play with friends as well.Microsoftcarries a Zacks Rank#3 (Hold). You can see the complete list of today"s Zacks #1 Rank stocks here .
3. Take Two Interactive "s TTWO 2K division launched its first VR basketball game, NBA 2KVR Experience, with a price tag of $14.99, on Nov 22, 2016. The game which can be played on HTC"s Vive, Sony"s SNE PS VR and Samsung Gear VR, is not yet available on Facebook"s FB Oculus Rift VR headset but is expected to arrive shortly. Undoubtedly, AR/VR and AI are the next steps in technological innovation offering lucrative business opportunities. Per a CNBC report, Otto Berkes, a co-founder of Xbox is of the opinion that AI and VR will mark a new golden era for the gaming industry. Berkes was quoted by CNBC saying "One of the aspects of VR that has incredible potential is interaction and communication - interacting with characters that are both artificial and virtual, being able to blur distance and geography; you can be anywhere and literally in any time. We"re entering another golden age of interactive content development." Though the AR/ VR industry is still at a nascent stage, a recent IDC report estimates global revenues of the AR/VR market to grow at a CAGR of 181.3% from $5.2 billion in 2016 to over $162 billion in 2020.
A few days back, NetEase NTES launched its first VR game, Twilight Pioneers on Google"s VR platform, Daydream. Plus, Electronic Arts EA will be releasing two VR games this holiday season, Star Wars Battlefront Rogue One: X-wing VR Mission for PlayStation VR and Need for Speed: No Limits for Google"s Daydream platform.
Computer and Technology Sector Price Index
Computer and Technology Sector Price Index
Performance
The following table shows the price movement of the major video game companies over both the past five trading days as well as the last six months:
Company
Last 5 Days
Last 6 Months
ATVI
-5.46%
-4.51%
EA
2.45%
5.31%
GLUU
17.35%
-8.00%
MSFT
2.32%
17.08%
NTES
-1.27%
33.09%
TTWO
1.11%
26.48%
ZNGA
-1.38%
11.33%
Over the last five trading sessions, Activision ATVI was down 5.46% while Glu Mobile GLUU was up 17.35%.
Over the last six-month period, NetEase surged the most (33.09%). Recently, NetEase reported solid third-quarter 2016 results. The increasing popularity of mobile-based games and the strength of PC games (licensed & self-developed) continue to keep investors interested in the stock. Moreover, higher mobile advertising revenues were an added incentive. NetEase has announced a new $1 billion buyback program for its ADRs over a one-year time frame.
Glu Mobile was down 8.00% over the same time frame due to the underperformance of most of its releases. Its weak third-quarter results were somehow overshadowed by the announcement of a new CEO and acquisition of a majority stake in CrowdStar.
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