(Adds details, updates shares, adds analyst's comments)
By Lehar Maan
Jan 14 GameStop Corp, the world's
largest videogame retailer, warned of lower-than-expected
profit as sales sagged for games played on older versions of
Xbox and PlayStation consoles.
The company's shares fell as much as 20 percent in early
trading, wiping out almost $1 billion in market value.
Microsoft Corp launched the latest version of its
Xbox in November, selling three million consoles by the end of
December. Sony Corp has sold 4.2 million PlayStation 4
consoles as of Dec. 2 after launching it in November.
GameStop said on Tuesday that sales fell 22.5 percent in its
new software business as a greater-than-expected decline in
sales of older versions of the games offset strong demand for
software for the new consoles.
Morningstar analyst Liang Feng said too much of a drop in
sales of old console software could hurt GameStop as it is
historically the company's strongest business.
The retailer said it expects fourth-quarter gross margins
for pre-owned category of 46 percent to 49 percent.
GameStop's shares fell 8 percent on Jan. 7 on fears that
Sony's planned service to stream older-generation games would
jeopardize the retailer's large and growing used-game business.
GameStop's business has also been hurt by lower-priced
online offerings as gamers spend more time on tablet computers
The company said it expects earnings to be between $1.85 and
$1.95 per share for the fourth quarter.
Analysts on average were expecting a profit of $2.14 per
share, according to Thomson Reuters I/B/E/S.
The company's shares were down nearly 19 percent at $36.87.
Nearly 1.5 million shares changed hands by 1130 ET, more than
two times the stock's 10-day moving average.
(Reporting By Lehar Maan & Neha Alawadhi in Bangalore; Editing
by Saumyadeb Chakrabarty and Sriraj Kalluvila)