GameStop Goes Digital to Stay in the Game

Gamestop (NYSE:GME)

Bricks-and-mortar game retailer GameStop Corp. (NYSE:GME) has made a couple of acquisitions that the company expects to help it pick up some business in the online video gaming market. It could work, but there are caveats.

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(Paul Ausick | 247WallSt.com) GameStop has acquired privately held Spawn Labs and the Impulse Inc. subsidiary of Stardock Systems, Inc. for undisclosed sums. Each company provides a different piece of the online distribution model that GameStop is trying to develop in an effort to compete for customers of games downloadable to any Internet-connected device. Where the company has historically competed with the likes of Best Buy Co., Inc. (NYSE:BBY), it is now looking at going up against game makers like Electronic Arts Inc. (NASDAQ:ERTS).

In its press release announcing the acquisitions, GameStop’s CEO said that the company “will continue to make appropriate investments related to our multichannel strategy.” Could it be that these guys didn’t get the memo about how the Internet eliminates (in geek-speak, disintermediates) the need for expensive distribution channels. How does providing a platform for a game from EA make any money for GameStop?

In an interview cited in The Wall Street Journal, GameStop’s CEO noted, “We’ve become more and more a technology company.” He didn’t say that GameStop would be developing its own games.

Read more: GameStop Saves Itself, Buying Into The Download Model (GME, BBY, ERTS) - 24/7 Wall St

GME 101:
GameStop Corp (GME) shares have traded between $17.70 and $25.75 over the past 12 months.  GameStop shares are now trading with a P/E Ratio of 8.6 and EPS of 2.66.
GME shares closed Friday at $22.92, up 1.78% or 40 cents and volume finished at 005,353,233 shares traded.

GME

SOURCE: http://247wallst.com/2011/04/01/gamestop-saves-itself-buying-into-the-do...

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