GameStop Corp. (NYSE:GME)

I believe the shorts are wrong, positive cash flow, affordable and not bad dividend introduced of over 2.5%. Company has a net cash position, and has met or beat analyst expectations so far.

After seeing how big a hit Skylanders is with the people in my kid's school and seeing them fly off of shelves in video game stores I have a feeling that more software developers will design games that incorporate toys. The potential for new games like this is limitless, Pokeman, Star Wars, Gormitis, (can you tell that I have kids yet?), all could have little toys that activate real characters in games. If this trend hits big it will allay some of the fears that people have about games going to a download-only model and bypassing physical stores.

Of course, places like Amazon and Walmart will always take away some business, buy GameStop is so cheap at this level that if isn't doomed by a game download model coming in the near future it should be a buy.

Deej

With the new Microsoft gaming console rumored to not allow for secondary ownership of disc based games and the increase of digital downloads both GameStop's new and used game markets stand to take a fairly hefty hit over the next few years.

Do I think the biggest bricks and mortar video game store in America is going to have a good 2012, potentially one of the biggest years for video games in a good long while? Yes I do.

We had some killer games at the end of last year... yet at the end of the day technology is moving to fast for this company to stay at it's current valuation.
I know there will always be the debate about if this will be the next blockbuster, and while I say it won't be, this company won't fair as well in the future and won't beat the s&p 500.

my grandson---pulls me to this store--

The industry is moving towards digital distribution and cutting out the middle man. Add in the fact that more and more companies are doing everything they can to stomp out the used game market, and things are not looking good for gamestop in the long term.

IP value.

Long term, GameStop cannot survive the digitally distributed content revolution that will come about in the next gen, and next next gen consoles. Yes, there will be a market for physical copies of certain titles, but that market for physical media will shrink over the next 5-10 years.

1. Digital downloads boom
2. Low P/E + cash-flow protection

This is the best release of video game software going into a holiday season ever. You have 7 AAA releases Skyrim, Assasin’s Creed, Call of Duty 3, Battlefield 3, Uncharted 3, Gears of War 3, and Batman Arkham City. What do these all have in common? Many of these games are the third installments of the best selling games of all time. There latest installments are setting new first week records. This will translate into many high demand games coming on the used market where GME margins are the largest. There is also no drop off of highly anticipated sequels to triple AAA games in 2012 with the release of Mass Effect 3, Bioshock Infinite, Grand Theft Auto 5, and Diablo 3. These games will bridge the gap to the new console cycle.

Well where is the problem? Hardware … no not really. The next console cycle is under way. Wii sales are down because the Wii 2 or Wii U is coming in the spring of 2012. The NEW XBOX 720 will be coming Holiday 2012 or Spring 2013. You will see the first glimpse of it at the 2012 Consumer Electronic Show in January. Look who is giving the first keynote address at CES Microsoft. Quote from CES website “Steve Ballmer's keynote is a great way to kick off the exciting 2012 International CES. We are excited to hear Microsoft’s latest initiatives and Ballmer’s vision for where consumer technology is heading. Microsoft has used the CES keynote stage in previous years to unveil innovative new products, including the original Xbox and Avatar Kinect.”

2006 to 2008 run up in GME coincided with the new console cycle of the wii, xbox 360 and ps3. 5 years latter this next cycle is under way.

GameStop is doing all the right things to keep the stock price up, but the longer term projections show that sales are slowing, earnings are slowing, and ultimately the business model is deteriorating. Until they can get into a business with a growth, or at least profitable, forecast, the long-term projection is that ultimately the stock will suffer.

Pretty soon digital downloads will do to this industry what iTunes did to Sam Goody, Tower Records, et al.

Digital downloads and/or purchases from online vendors like Amazon make this the next version of Borders. Even if this gets bought out, the long-term is a graveyard.

It's funny how much I used to buy from Gamestop. Now everything I purchase is from Amazon or digital download from either Sony's or Microsoft's marketplace. Gamestop has no future with this shift.

It's kind of sad really because I remember going there as a kid when they were Funco Land and EB.

Spawn labs and impulse purchases will pay off for them!

Impulse

Digital sales = 25% gross margin & used games = 45% gross margin. As revenue shifts towards digital, the used market is cut in half by my estimate - that is how GME makes money (so it's not surprising to see management position it's power-up rewards program around driving traffic for its used game business. Some argue that digital is a ways off but 2 nearer term catalysts exist for used-game market deterioration: 1) major new competition (BBY is investing over $100M in this business - that doesn't include marketing expenses; AMZN now offering this & others) and 2) game publishers requiring an additional $10 fee to activate a used game - that should impact margins severely given the countless cheaper alternatives (search amazon for games and compare prices to GME).

COD