>Research firm DFC Intelligence valued the U.S. video game market at $12.6 billion in 2005. The global industry is expected to hit $42 billion by 2010 but is currently in flux due to a change to new video game console technology that is putting a dent in sales.< http://www.wallst.net/news/news.asp?Source=REUTERSNEWS&id=2882
GameStop, the No. 1 U.S. video game retailer, said on Thursday that quarterly profit rose 13 percent, beating forecasts, as sales of Xbox 360 consoles and games buoyed results after its purchase of rival Electronics Boutique. REUTERS/Handout
GameStop profit jumps on merger 5/18/2006 1:20:44 PM
LOS ANGELES (Reuters) - GameStop Corp. (GME.N), the No. 1 U.S. video game retailer, on Thursday posted a 13 percent rise in quarterly profit, beating forecasts, as sales of Xbox 360 consoles and key titles buoyed results after its purchase of rival Electronics Boutique.
Shares of the Grapevine, Texas-based retailer, which gets healthy profits from used game sales, rose as much as 6.7 percent on the results.
GameStop said it had first-quarter net income of $11.7 million, or 15 cents per share. That beat a company per-share forecast of 4 cents to 5 cents issued in March.
In the year-earlier quarter the retailer had net income of $10.3 million, or 19 cents per share. Per-share earnings were higher a year ago because the company had fewer shares prior to its acquisition of Electronics Boutique in October.
Revenue more than doubled to $1.04 billion from $475 million a year earlier. Besides the acquisition, the company attributed the increase to strong sales of Microsoft Corp. (MSFT.O) Xbox consoles and games such as "Tom Clancy's Ghost Recon: Advanced Warfighter" from UbiSoft (UBIP.PA) and "The Elder Scrolls IV: Oblivion" from Bethesda Softworks and Take-Two Interactive Software Inc. (TTWO.O)
The quarter's best-selling title was Square Enix Co. Ltd.'s (9684.T) "Kingdom Hearts II" for Sony Corp.'s (6758.T) PlayStation 2.
Research firm DFC Intelligence valued the U.S. video game market at $12.6 billion in 2005. The global industry is expected to hit $42 billion by 2010 but is currently in flux due to a change to new video game console technology that is putting a dent in sales.
The company forecast second-quarter comparable store sales -- a key gauge of retail performance -- down 2 percent to up 1 percent and earnings, excluding merger and stock-based compensation costs, of 8 cents per share to 9 cents per share.
It also raised its full-year earnings outlook to reflect the first-quarter results. The new forecast calls for a profit, before items, of $2.10 per share to $2.20 per share.
Merger costs for the year are expected to be 3 to 5 cents per share.
The company said margins on used game sales hit 51 percent in the first quarter -- a likely peak.
Margins on new game sales are roughly 20 percent to 25 percent, said Janco Partners analyst Mike Hickey, who added that the company's results "obliterated expectations."
GameStop shares were up 2.5 percent to $45.73 in afternoon trade on the New York Stock Exchange, off a session high of
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