ELBO sells off on warnings from GME. Here are a couple of reports:
GameStop shares plunge after profit warning
Thursday December 19, 11:49 am ET
LOS ANGELES, Dec 19 (Reuters) - Shares in GameStop Corp. (NYSE:GME - News), the No. 1 specialty video game retailer, fell sharply on Thursday, a day after the company warned of a profit shortfall, and the stock of its closest competitor, Electronics Boutique, also dropped.
GameStop shares were off 29 percent at $9.40 in late morning trade on the Nasdaq market, an all-time low for the stock, which went public in February at $18.
Shares of Electronics Boutique Holdings Corp. (NasdaqNM:ELBO - News) sank 18 percent to $17.95, their lowest level since March 2001.
GameStop warned on Wednesday of a shortfall of as much as 29 percent in its fourth-quarter earnings per share, blaming a shorter-than-usual holiday shopping season and weak conditions in the overall economy.
The company said it now expected earnings per share in the quarter ending in January of 48 cents to 52 cents, compared with its prior guidance for 62 cents to 68 cents.
It also said it expected comparable-store sales to decline 4 percent to 6 percent, compared with a prior forecast for an increase of 8 percent to 12 percent.
"We are disappointed by GameStop's lowered guidance and are surprised at the timing," Wedbush Morgan analyst Michael Pachter said in a research note. "The preannouncement came barely halfway through the current quarter, with the most important selling days of the season still to come."
Pachter lowered his earnings per share estimates on the company for the next two fiscal years and also cut his price target on the company's stock to $23 from $26.50, though he maintained a "buy" rating.
Brokerage Gerard Klauer Mattison, however, downgraded GameStop to "neutral" from "buy" on the news.
"We believe investors should step aside and let the dust settle with regards to holiday 2002," analyst Edward Williams said in a note.
Williams said investors should wait until the company reports its results to see what part of the shortfall is company-specific and what parts are related to the economy or weak sales of video games and game consoles.
"Our instinct is that it is somewhat specific to GameStop (or specialty retailers), with weaker Xbox and GameCube sales exacerbating the issue," he said.
He also downgraded Electronics Boutique's stock to "neutral" from "buy" on concern that the company may have difficulty avoiding a similar shortfall.
Pachter maintained his "buy" rating on Electronics Boutique, though, saying the company was outperforming the industry.
biz.yahoo.com
Electronics Boutique (ELBO ): Reiterates 4 STARS (accumulate)
Analyst: Marcos Kaminis
Rival GameStop lowered its fourth quarter guidance, and now anticipates 4%-6% lower same-store sales. Industrywide November same-store sales were below expected, and the adjustment has occurred in the prices of video gaming stocks. S&P thinks this is partly because of the late start of the holiday season, which should inflate late December results. Fourth quarter earnings per share growth estimates were higher for GameStop than Electronics Boutique, but S&P thinks Electronics Boutique could lower its guidance to six cents below S&P's prior fiscal 2003 (Jan.) estimate of $1.71. With shares trading at 11 times the $1.65 expected earnings, Electronics Boutique is attractive for contrarians.
yahoo.businessweek.com |
