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GameStop posts larger third-quarter profit (hardware sales far beyond projections)

Mon Nov 15, 2004 11:10 AM ET
(Adds details; previously NEW YORK)

LOS ANGELES, Nov 15 (Reuters) - Video game retailer GameStop Corp.(GME.N: Quote, Profile, Research) on Monday reported a larger quarterly profit on strong sales of a broad range of video games and a boost in hardware sales from a redesigned PlayStation 2.

GameStop had a net profit of $12.1 million, or 21 cents per share, compared with a year-earlier profit of $10.7 million, or 18 cents per share. Sales rose 28 percent to $416.7 million.

Excluding a one-time charge, its profit was 24 cents a share, which met Wall Street analysts' expectations, according to Reuters Estimates.

"The launch of the new (Sony Corp. (6758.T: Quote, Profile, Research) ) PSTwo in early October, coupled with the late October launch of the (Microsoft Corp. (MSFT.O: Quote, Profile, Research) ) Xbox holiday bundle, drove hardware sales far beyond our original projections," GameStop Chief Executive Richard Fontaine said in a statement.

The Grapevine, Texas-based company raised its outlook on fourth-quarter per-share results to 81 cents to 84 cents, and boosted full-year profit view to $1.28 to $1.31 a share, before one-time charges.

Analysts were expecting a fourth-quarter profit of 24 cents and a full year profit of $1.28.

"In our view, the company is well positioned to exploit several potentially strong industry catalysts over the next several weeks and months," Harris Nesbitt analyst Edward Williams said in a note.

One week ago GameStop's chief competitor Electronics Boutique Holdings Corp. (ELBO.O: Quote, Profile, Research) raised its third-quarter forecast on strong software and hardware sales, leading analysts to raise their estimates for GameStop on expectations it would also outperform.

Shares in GameStop were off 3 percent at $22.80 in morning trading on the New York Stock Exchange. The stock hit June 2002 highs last week.
 
This does seem really strange to me.

We saw the hardware NPD sales for October. They weren't all that high for anybody (except GBA), so what is this windfall they're talking about. I'm thinking their hardware units have been so hard to maintain, that the new systems/bundles are simply giving the appearance of a hardware boost. That or Gamestop and EB, are getting a disproporitianate allocatoin of systems.
 
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