And Here We Thought Videogames Were Recession-Proof. Guess Not.
Back in August, Grapevine-based GameStop posted big second-quarter gains, but the stock price dropped nonetheless, because, as The Wall Street Journal pointed out at the time, there were "sign the results and outlook may not be good enough for investors." Also, even in August folks were scared the oncoming recession would make their joysticks go limp. Turns out, they were right to be nervous.
Today GameStop did indeed post a third-quarter loss -- $46.7 million in earnings in '08, compared to earnings of $52 million in '07 -- even though its sales rose to $1.7 billion from $1.6 billion. Said the company in a statement: "We continue to expect a solid fourth quarter in sales and earnings, albeit tempered slightly by the weakness in consumer spending." Which is why it scaled back its fourth-quarter estimates by a bunch. Its stock price is down this morning by more than a dollar, to under $20 after reaching $63.77 this time last year, but has rebounded slightly following a 7-percent plunge this morning. Today's announcement comes one day after GameStop announced it was borrowing $150 million from Bank of America -- though it didn't say why. --Robert Wilonsky
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss Observer's biggest stories.