* First-quarter revenue rises 7 pct
* Demand for new games consoles, mobile products strong
* Software sales set to recover - president
* Shares rise as much as 5 pct in extended trading
(Adds president, analyst comment)
By Lehar Maan
May 22 Video game retailer GameStop Corp
reported a 7 percent rise in quarterly revenue, driven by growth
in its mobile business and demand for new games consoles made by
Sony Corp and Microsoft Corp.
GameStop's shares rose as much as 5 percent in extended
trading on Thursday, after the company also reported a
better-than-expected first-quarter profit.
GameStop forecast second-quarter earnings of 12-20 cents per
share. Analysts are expecting earnings of 17 cents per share,
according to Thomson Reuters I/B/E/S.
To combat falling video game software sales, GameStop has
stepped up sales of used games and hardware in recent years, as
well as expanding its range of digital and mobile products to
include iOS and Android devices in some stores.
The Grapevine, Texas-based company said revenue in its
hardware business rose 81 percent to $438 million for the
quarter ended May 3. Revenue from its mobile and consumer
electronics business doubled to $102.2 million.
Sales of new game software fell 20.4 percent, hurt by fewer
launches of popular video game titles.
The results reflect a wider trend. According to a report by
market research firm NPD, U.S. sales of video game hardware grew
47 percent during the first quarter ended March 31, while
software sales were down 27 percent in February.
Total consumer spending on video gaming in the first quarter
fell 1 percent to $4.6 billion from a year earlier, NPD said in
the report, published on Wednesday. (link.reuters.com/vyp59v)
The release of new games, however, could reverse this trend.
Pre-orders for next generation consoles have been strong.
GameStop President Tony Bartel, speaking on a post-earnings
conference call, said he expected a recovery in software sales
to begin in the current quarter, with the release of games such
as Ubisoft Entertainment SA's "Watch Dogs."
"Watch Dogs" is slated for release on May 27, to be followed
later in the year by Activision Blizzard Inc's upcoming
releases, including sci-fi game "Destiny" and military-action
shooter "Call of Duty: Advanced Warfare."
"The industry is going to get stronger because we are seeing
a lot of consoles sold," said Wedbush Securities analyst Michael
Pachter. "They will buy software so we should see software sales
GameStop said its net profit rose to $68.0 million, or 59
cents per share, in its first quarter from $54.6 million, or 46
cents per share, a year earlier.
Revenue rose to $1.99 billion from $1.87 billion. Analysts
on average had estimated a profit of 57 cents per share on
revenue of $2.03 billion.
GameStop's shares closed at $36.88 on the New York Stock
Exchange on Thursday.
(Editing by Joyjeet Das and Robin Paxton)