Video game stocks blasted after disappointing NPD sales report

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Sector Snap: Video game stocks take a hit

NEW YORK — Shares of video game companies took a hit Friday after market researcher NPD Group reported a 26 percent drop in April video game sales, a weak showing for the industry after a slight uptick in March.

Hurt by a lack of big game launches and the Easter holiday falling in March, overall video game hardware, software and accessory sales fell to $766.2 million last month from $1.03 billion a year earlier. Software sales dropped 22 percent to $398.5 million.

“While we do not publish explicit NPD monthly estimates, it is fair to say that these figures are significantly weaker than we and most investors anticipated,” wrote Broadpoint AmTech analyst Ben Schachter in a note to investors.

But the analyst pointed to several bright spots, including an increase of Xbox 360 and PlayStation 3 hardware sales, and higher sales of games made for the PS3. Handheld gaming systems, mainly the Nintendo DS, accounted for a big chunk of the month’s decline. Wii sales also fell.

“Since Nintendo has been the primary beneficiary of Wii and handheld sales, this data is clearly most negative for that company,” Schachter said. He added that game makers with hit titles on key gaming platforms can still do well.

Jim Yin, an analyst with Standard & Poor’s Equity Research, said part of the decline “could be attributed to consumers delaying purchases in anticipation of the next generation of handheld devices and console games, which should be launched in the fall.”

Shares of Electronic Arts Inc. fell 76 cents, or 4.2 percent, to $17.33 in afternoon trading. Shares of Activision Blizzard Inc. fell 31 cents, or 2.8 percent, to $10.65. Shares of GameStop Corp., the world’s largest video game retailer, fell $1.07, or 4.7 percent, to $21.61. Take-Two Interactive Software Inc. fell 33 cents, or 2.9 percent, to $10.91.