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GameStop Has Huge Q4

18 Mar, 2008 By: Chris Tribbey

Leading U.S. video game retailer GameStop enjoyed a giant fourth quarter (ended Feb. 2), with profits of just under $190 million, a 46% bump in earnings over the same period in 2007. For the year, the company earned $288 million.

The popularity of Nintendo's Wii, more console choices and more female gamers all helped the 5,200-store chain's performance, and GameStop CEO R. Richard Fontaine also singled out high-definition as a benefactor.

“The power of the new consoles, coupled with the ‘wow' factor of HD game play, has taken gaming to another level,” he said during an earnings call March 18. “And with Blu-Ray clearly being the winner in the [next-generation] DVD race, the [PlayStation 3] sales are already accelerating and will be an even better buy in 2008 and into the future.”

Fontaine also speculated that digital downloading of games, something the next-generation consoles are enabling consumers to explore more easily, will be “additive, not dilutive” to the company's shares.

“I think the trends of digital downloading are pretty much all in front of us right now … we've got massive, massive uses of digital downloading, the peer-to-peer video sharing just being one of them,” Fontaine said. “We see small files, we see small purchases, micro purchases, but again we're looking at that as being additive to the experience and in no way threatening to us.”

Fontaine also speculated that both the PlayStation 3 and the Xbox 360 could see $50 price cuts this year. “We have no knowledge or verification of any of those, but that's just kind of the assumption we've used,” he said.

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