GameStop Corp., the video-game chain that said this week its CEO had surgery for brain cancer, surged the most in a year after reporting profit that beat estimates as consumers bought new players and software.
Net income more than doubled to $24.6 million, or 22 cents a share, from a year arlier, GameStopsaid in a statement yesterday. Analysts on average predicted 18 cents, according to data compiled by Bloomberg.
Consumers are upgrading to the new generation of game players, Sony's PlayStation 4 and Microsoft's Xbox One, and buying new titles with snappier graphics. Sony said last week that worldwide sales of the PS4 have exceeded 10 million units, a record for its PlayStation devices.
"The faster-than-anticipated uptake of new consoles, as well as the remaining software lineup, bode well for the company," Michael Olson, a Piper Jaffray & Co. analyst, said in a note before the results. He recommends buying the stock.
Mr. Olson said he expects software sales for the rest of the year to improve with the release of new titles such as "Destiny" and "Call of Duty" from Activision Blizzard, a remastered "Grand Theft Auto V" from Take-Two Interactive Software, and "FIFA 15" and "Madden NFL" by Electronic Arts.
GameStop's revenue climbed 25% to $1.73 billion in the period ended Aug. 2, beating estimates of $1.64 billion.
The company, based in Grapevine, Texas, said Aug. 19 that CEO Paul Raines underwent surgery to identify and remove a small cancerous tumor from his brain.
The tumor, located in "an easily accessible" part of the brain, was found early and doctors said his prospects for a full recovery are good, the company said in a filing. Mr. Raines, 50, will undergo preventative chemotherapy. His rehabilitation is expected to last about six weeks, a period that will limit his ability to travel without interfering with his duties, GameStop said.
For the current quarter, the company forecasts profit of 58 cents to 64 cents a share, compared with analysts' projections of 58 cents. GameStop predicts comparable store sales will grow 1% to 5% from a year earlier.
GameStop's shares had declined 18% this year through yesterday.
~ Bloomberg News ~