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GameStop Corp. Message Board

  • bigfry_52 bigfry_52 Nov 19, 2002 4:36 PM Flag

    GREAT NEWS after the market closed!

    Analysts from UBS Warburg, SWS Securities and SunTrust Robinson reiterated their ratings on GameStop Tuesday.

    All three analysts said the 2% drop in gross
    margin for the quarter was expected and is related to an expected shift toward new game sales.

    Last year, GameStop sold more used games in the third quarter because game makers scaled back the release of new games in anticipation of the release of Xbox and GameCube game platforms for the holiday season.

    Used games sell for less but have a higher margin than new games.

    Wedbush Morgan Securities analyst, Michael Pachter, said investors are getting hung up on the gross margin decline for no reason.

    As far as Pachter is concerned, there is nothing fundamentally wrong with the company and he said the drop in the stock's valuation is an absolute gift to savvy investors.

    Pachter also said investors don't seem to understand that the gross margin erosion isn't from promotional activity and discounting.

    According to Pachter, GameStop has a 20% margin on new games, a 30% to 35% margin on accessories and a 50% margin on used games.

    "Investors are punishing the company for succeeding in their core market of new game sales," adding "that's just plain--dumb!"

    Pachter and Wedbush don't have any investment banking relationship with GameStop and don't plan to seek any such business in the foreseeable future.

    By Jacquie Jordan,
    Dow Jones Newswires; 201-938-5400

    (END) DOW JONES NEWS 11-19-02
    04:12 PM- - 04 12 PM EST 11-19-02

 
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