Bears hunt video game stocks
Apparently, 68% growth just isn't good enough, so investors sold shares of the video game software makers Friday.
Research firm NPD triggered Friday's sell-off with a report that said the U.S. video game sector grew 47% in April, compared with the same month last year, to $1.23 billion, with software up 68% and hardware up 26%.
The data sent shares of Electronic Arts down 3.8%, Activision down 1.6%, Take-Two Interactive Software down 1% and Midway down 1.4%. THQ bucked the trend, with its shares rising 1%. The overall market finished little changed.
But the disappointment should pass, with Wednesday's massively anticipated release of Nintendo's fitness-themed game "Wii Fit." It is already sold out on Amazon.com.
That's why for May, "We look for a 160%-plus increase in software sales and a 100% increase in hardware sales," Kaufman Bros. analyst Todd Mitchell said.
The family-friendly Wii, as per usual, dominated hardware in April with 714,000 units sold, nearly twice as many as the combined sales of Microsoft's Xbox 360 (188,000) and Sony's PlayStation 3 (187,000).
Sales of the PS3 and Xbox fell from the month before, a surprising development given that "Grand Theft Auto IV," available only on those platforms, was by far the biggest-selling game in April.
NPD said consumers snapped up 1.85 million units of the raunchy game in April even though it wasn't released until the penultimate day of the month. The second-best-selling game in April, with 1.1 million games sold, was "Mario Kart Wii."
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