Microsoft (MSFT) seeing Xbox 360 shortages

Secondary plays: GME, TGT

GameStop is expected to report stellar results, when its reports fourth quarter results in March. Video game sales continue to be an island of strength amid a weak retail environment. Indeed, The NPD Group recently reported that sales of video game hardware, software, and accessories increased 43% to $18 billion in 2007. While that pace will decline over the next few years, the industry growth trends is expected to remain robust. GameStop will benefit a great deal from those strong industry trends.

GameStop is the largest specialty retailer focusing on video game software and hardware sales. The company caters to the hardcore gamer, as well as the casual video game buyer. The retailer has 5,123 stores, sells new and used software and hardware and should generate over $7 billion in sales this year. However, competition in this space is fierce and video game shoppers have many alternatives. Big-box retailers, such Best Buy, Wal-Mart (WMT), and Target (TGT) look at video games as high margin sales that can help drive store traffic. These companies focus on new hardware and software sales.

14/02/08 at 09:25
Microsoft seeing Xbox 360 shortages in U.S. - Red Herring (28.96 )
Red Herring reports the co is seeing shortages of its Xbox 360 video game console in the United States, as the co failed to anticipate strong post-holiday demand, an executive said. "We are really running short of product here in the United States," Jeff Bell, head of global marketing for Microsoft's games business, said in an interview. "You could say we misjudged demand." The comments came a day before NPD is expected to release video game sales data for January and Bell said Microsoft was hoping to "manage expectations." "We're literally out of stock in many stores. We think this will have an impact on our sales," Bell said. "It may cause the overall industry number to be down a little bit. "Retailers have been really upset, they are on allocation. It is a lag I think we're seeing in January and that may continue into February, then as spring ramps up, we'll be able to meet that demand."