Even After the Dividend GME is Sitting on a Mountain of Cash
GameStop's first quarterly dividend payment comes out to $0.15 a share -- Pachter estimates this will total to $21 million. He forecasts that the company will end the fiscal year (April 2011-May 2012) with over $680 million in cash, which it could use to repurchase shares.
He also notes "GameStop likely gained market share over the holiday period," pointing to its 9.9 percent growth in new software sales during November and December, which was above the 4 percent drop NPD Group reported for retailers.
GME is sitting pretty entering the next console cycle. GME can definitely increase the dividend in the quarters to come or target other companies. There were some rumors they were targeting Game Group of the UK. I don’t know if they want to do this. Things weren’t looking good for Game and all indicators were pointing to a Euro recession but maybe this is way to expand on the cheap. I rather GME go after Steam if the price is right or make a more significant move in the social area, Jolt gaming doesn’t seem to be doing much. Social gaming could be cheap to get into and provide more growth.
There is talk about the Wii U having NFC chips. This could lead to toys with DLC built into them, where you would need the figurine to have the DLC for the game. You see this idea in the game Skylander. This could be huge and work in multiple games and become a craze like beanie babies.
Even after the dividend GME has ton of cash to grow and a larger market share entering the next console cycle.