Videogame Shares Falling, Weak Sales Data To Blame

Video game shares are trading lower on Friday following a disappointing reading on August sales from market research firm NPD. As a number of analysts noted this morning, NPD reported that August console game sales rose 13% year-over-year, while hardware sales rose just 3%.

Pacific Crest’s Evan Wilson notes that all four of the major publicly held video game software providers posted disappointing sales for the month.

• Activision Blizzard (ATVI) saw sales up 1%, below Wilson’s estimate of 11% growth.
• Electronic Arts (ERTS) sell-through was up 18%, below Wilson’s estimate of 33%. EA had the month’s best-selling title with Madden ‘09; on the list of the top 10 best-selling titles, three versions of Madden swept the top three slots.
• Take-Two’s (TTWO) sell-through was down 53%, worse than the 37% drop Wilson had expected. He notes that the company last August shipped BioShock; he also says that “the miss is attributable partially to Grand Theft Auto’s shorter-than-expected tail.”
• THQ’s (THQI) sell-through was down 10%, worst than the 3% fall Wilson had expected.

Todd Mitchell, an analyst with Kaufman Bros., contends that the August data “would seem to confirm our thesis that the broader economy is weakening.” (Oooooh boy… a weak economy? … Must …control …urge …to …mock…) “Shares of video game companies have been under pressure for some time due to just such fears,” he writes. “We think they will remain under pressure in the near-term as investors adjust their expectations downward.” Mitchell notes that Nintendo Wii console sales were at their lowest level since January.

In today’s trading:

• Activision is down 54 cents, or 3.04%, to $17.24.
• THQ is down 19 cents, or 1.4%, to $13.36.
• Electronic Arts is down 72 cents, or 1.6%, to $44.84.
• Take-Two is up 19 cents, or 0.88%, to $21.84.
• GameStop (GME) is down $1.41, or 3.61%, or $41.16.

Comments

[dj_bfree:]

Sales are usually flat in the third quarter anyways. Most of the time, the publishers try to push their AAA products out during the winter.

2008 Sep 13 02:18 PM

[borisb:]

WM-P says hurricances, olympics among other things distracted consumers.

2008 Sep 15 07:12 PM

[gillberk:]

The structure and culture of a Japanese game developer is different from a western one. Throughout the history of Japanese game design, many developers have seen fit to remain mostly anonymous, even using Video game shares are trading lower on Friday following a disappointing reading on August sales from market research firm NPD. As a number of analysts noted this morning, NPD reported that August console game sales rose 13% year-over-year, while hardware sales rose just 3%.

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gillberk

www.drivenwide.com

2008 Sep 17 06:48 AM