Ahead of the Bell: Weak forecast for video games

AP News
|
Posted: Dec 10, 2009 9:10 AM

The video game industry had a 13 percent drop in overall sales during November, a Kaufman Bros. analyst estimated Thursday.

Kaufman's Todd Mitchell also cut his forecast for game publisher Electronic Arts Inc.'s quarterly financial results, citing downbeat comments from CEO John Riccitiello on Wednesday.

The analyst predicts industry game sales rose just 3 percent to $1.49 billion, down from a previous estimate of 10 percent growth.

Mitchell expects hardware sales fell 33 percent to $810 million because of an industrywide drop in average sale prices.

Market researcher NPD Group said last month that total sales of video game hardware, software and accessories fell 19 percent in October from the same month last year, to $1.07 billion.

The video game industry has suffered during the recession as consumers cut discretionary spending.

Mitchell cut his third-quarter projections for Electronic Arts to earnings of 55 cents per share on sales of $1.4 billion. That's down from 64 cents per share on $1.59 billion. He kept a "Buy" rating on the stock, however.

On average, analysts expect 60 cents per share on $1.4 billion for the quarter ending this month, according to Thomson Reuters.