2010-01-27 02:52:12
Again!!!
Bear of the Day
GameStop Corp. (GME)
By: Zacks Equity Research
January 27, 2010 | Comments: 0
GME
The video game industry, of which GameStop Corp. (GME) is a part, had surged ahead for a number of years but is now grappling with the recession.
Heavy job losses and reduced access to credit markets have led to lower discretionary spending. This has resulted in lower demand for video game consoles and new software. Moreover, the cutthroat competition from big guns is also weighing upon GameStop's results.
These unfavorable backdrops were evident from GameStop's sluggish holiday shopping season, which prompted management to lower its comparable-store sales and earnings guidance. Thus, we maintain an Underperform rating on GME stock until we see an upturn in GameStop's growth trajectory.
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GameStop's profitability in the used games business could attract the interest of larger retailers like Best Buy, who could use their scale and loyal customers to establish a competitive position. (P) (z)
MAGE