Computer entertainment group Game’s shares plunged after US giant Gamestop warned of falling sales last week.
Gamestop, which revealed record profits up 13.4 per cent to $70.4m (£44.6m) in its first quarter to May 21, was cautious about prospects. The world’s biggest games retailer forecast lower earnings per share and warned that like-for-likes are expected to decline by between 8 and 11 per cent in the second quarter, compared with a 20 per cent increase for the period last year.
Analysts have warned that a lack of new generation hardware – probably until 2011 – threatens Game’s stellar recent performance. However, at the time of Game’s prelims last month, chief executive Lisa Morgan said the present generation of consoles has “lots of life left”.
But Singer analyst Mark Photiades initiated coverage of Game with a sell note the week before Gamestop’s update. He said Game’s earnings trajectory is “unappealing” in the short term because the peak of the current console cycle is “now past” and the next generation of consoles is “not scheduled for another couple of years”.