NEWS - Tuesday, December 16, 2003


Holiday Game Sales Not Too Good

"Channel checks at over 90 domestic retail locations have revealed less than exciting video game software sales trends thus far this holiday season," U.S. Bancorp Piper Jaffray analyst Tony Gikas said in a note released on Monday. "Many retailers indicated that soft sales are the result of few "hot" new titles, slow hardware sales, high software price points, and increased competition for consumers' home entertainment dollars as newer technologies become more affordable," he said. The holiday season is when most game publishers make a significant portion of their revenue and profits, and a bad holiday can put a publisher into a lengthy slide, leading the financial community to watch closely any indicators of good or bad sales. J.P. Morgan Securities, in a survey of 20 Wal-Mart Stores Inc. (NYSE:WMT - News) stores and 20 Electronics Boutique Holdings Corp. (NasdaqNM:ELBO - News) stores, found that about half had too much inventory. Yet at the same time, analyst Dean Gianoukos noted, those surveyed still expected unit sales to rise this year over last. Game shares were mostly lower on Monday, with top publisher Electronic Arts Inc. (NasdaqNM:ERTS - News) and competitors Take-Two Interactive Software Inc. (NasdaqNM:TTWO - News), Activision Inc. (NasdaqNM:ATVI - News), THQ Inc. (Pacific:THQI - News) and Atari Inc. (NasdaqNM:ATAR - News) roughly 1 percent to 3 percent lower in afternoon trade. The stocks have been under pressure since early November, as mixed sales data, the lack of a major price cut on gaming hardware and concerns about the ability of the publishers to meet their forecasts have weighed on the shares. STOCKS HAD RALLIED November sales data from market research firm the NPD Group is expected to be released this week, and in a separate note, U.S. Bancorp's Gikas cautioned on those figures. Gikas said he expects the data to show 12.5 percent year-over-year software sales growth for November, below his original 18 percent forecast. "We believe industry sales of video game software during 2003 will fall well short of original analyst, publisher, and retailer estimates," he said. Late last week, after being battered for weeks by negative commentary on early holiday sales, industry shares rallied when the chief executives of EA, Activision and THQ all appeared at a UBS investment conference and said things were not as bad as they seemed. "What we heard from the presenting companies reinforced our view of how the holiday selling season is tracking; clearly not spectacular, but by no means a disaster either," UBS games analyst Mike Wallace said in a note. "The overall market seems to be close to the range of expectations so far, though we do think there are still some issues." While there is broad agreement that there is no blockbuster title this holiday like last year's "Grand Theft Auto: Vice City," multiple analysts noted characterized EA's "Need for Speed Underground" as the top title at retail this season. Other titles tipped as hot sellers included Activision's "True Crime" and "Tony Hawk Underground" and Take-Two's "GTA Double Pack," a combination of "Vice City" and 2001's "Grand Theft Auto 3."
Source: http://biz.yahoo.com/

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