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Business

GameStop Slumps 40% to 16 years Low as game passes it




(Bloomberg) – GameStop Corp. Tumbled as much as 40% to a 16-year-old low after sending Moribund sales and halting dividends, and signaled that the troubled dealer is not in the process of accelerating video game trends. [19659002] The latest loss for GameStop reflects what analysts say can be a fundamental link between the company's business model, mainly focused on the sale of physical game boards on brick and fuel stores, and the industry's movement towards online and streaming games such as free-to-play Fortnite .

Compared sales – a carefully monitored measuring instrument – fell 10.3% last year, GameStop said late Tuesday. Analysts had estimated a 6.4% reduction, according to the Consensus Metrix. The stopped 38 percent quarterly dividend will save about $ 157 million a year, the company said.

GameStop's stock reduction Wednesday was the steepest since its first public offering in February 2002, with the stock falling to as little as $ 4.71 in New York trading. That's the lowest point since February 2003. The retailer has lost about 95% of the market value since peaking at over $ 10 billion at the end of 2007, and is now worth less than $ 500 million.

& # 39; Dramatic Pivot & # 39; 19659006] The Grapevine, Texas-based company "faces the need for a dramatic pivot, wholesale changes and aggressive action to remain relevant," said Jefferies analyst Stephanie Wissink in a note Wednesday.

Although GameStop's adjusted earnings were better than expected, the focus of the sales suggests that the company cannot withdraw from the downturn. Game hardware sales fell 35% – damaged by reducing demand for Xbox One and PlayStation 4 – while software revenue fell 4.3%.

GameStop launches a cost-saving drive under a new CEO, but investors are pessimistic that the core business can come back on track. Even before the decline late Tuesday and early Wednesday, the shares were down to 38% this year.

"The combination of transformation initiatives, ongoing consumption shifts to digital gaming and the very late stage console cycle is likely to make 2019 a very challenging year," Telsey Advisory Group analyst Joseph Feldman said in a note.

Earlier this year, Apple Inc. and Google announced that they launched online gaming services. And established gaming companies like Activision Blizzard Inc. are moving several of their titles to an online, free-to-play model.

GameStop also said it will cut the costs of the ThinkGeek collections by consolidating the online operation with the main corporate website.

George Sherman, a trade veteran who took over as CEO in April, appointed four senior executives to be part of his turnaround team, including a new finance director and chief consultant. Sherman said he wants to shut down the stores and focus on the best-selling products. He is also looking for ways to increase the company's digital business and host several events in the stores.

"We owe our team to develop a better strategy and a better product for our customer," he said on a conference call Tuesday. "We have hard work ahead of us, we are concerned with the challenge."

(Adding CEO to the last to the last paragraph.)

– With help from Ryan Vlastelica.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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