The video game industry, which surged ahead for a
number of years, is now grappling with the recession.
Heavy job losses and reduced access to credit
markets have led to lower discretionary spending.
This has resulted in lower demand for video game
consoles and new software. This unfavorable
backdrop was evident from GameStop’s (GME) dismal
recent results. Despite the weak environment,
management expects the release of popular titles in
the second half of 2009 to stimulate sales.
We
maintain an Underperform rating on the stock until
we see an upturn in the company’s growth trajectory.
Zacks Investment Research
