By Eric McWhinnie
GameStop (NYSE:GME) is the largest video game retailer in the world and operates over 6,500 stores across the US, Canada, Australia, and Europe. Founded in 1994, the company sells new and used video game hardware, software, and a wide variety of accessories. Thursday, before the opening bell, GameStop released third quarter earnings.
Earnings: Increased by 4.8% to $54.7 million, compared to $52.2 million from last year in the same period. Excluding debt retirement costs, the company earned 38 cents per share.
Revenue: Increased 3.5% to $1.90 billion, compared to $1.83 billion to prior year. Due to popular titles such as Halo Reach and Madden 2011, software sales increased 9%.
Actual Versus Wall Street Expectations: Earnings of 38 cents per share came in on the high end of expectations. Most analysts were expecting earnings of 37 cents per share.
Notable Stats: GameStop is a Fortune 500 and S&P 500 company. The company publishes Game Informer, which is the largest video game publication in the United States, offering a range of tips and game reviews to more than 4 million paid subscribers.
Besides being sold as a stand-alone peripheral, the Kinect is also sold in bundles, which should help spur additional demand for consoles.
Big titles such as the recently released Call of Duty Black Ops will also help boost demand this holiday season.
Commentary: The success of the hot new Xbox Kinect and Call of Duty Black Ops is a huge positive sign for GameStop. Xbox Kinect sold 1 million units in its first 10 days of release, and Microsoft expects 5 million units to be sold by the end of the year. Call of Duty Black Ops is one of the best selling games in history with $650 million in sales worldwide in its first 5 days. GameStop is well positioned to reap the benefits this holiday season as the company sells both products.
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Disclosure: No position