CHICAGO, March 28, 2014 /PRNewswire/ --Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Netflix (Nasdaq:NFLX-Free Report), GameStop (NYSE:GME-Free Report), Sony Corp (NYSE:SNE-Free Report), Microsoft (Nasdaq:MSFT-Free Report) andOuterwall (Nasdaq:OUTR-Free Report).
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday's Analyst Blog:
Game Over for GameStop?
After almost 25 years in the Video and Gaming rental business, Blockbuster Video filed for chapter 11 bankruptcy protection in September of 2010.In August 2010, after two previous chapter 11 bankruptcy filings, Hollywood Video finally liquidated all its assets.
Why did these once dominate companies fail so spectacularly?Streaming video was the main culprit. The advent of streaming video by companies like Netflix (Nasdaq:NFLX-Free Report) andHulu enabled movie and gaming lovers to stay at home, not deal with late fees, and save money.
Currently, companies such as Netflix and Hulu are major players in the streaming video market, but heavy competition is aimed directly at GameStop (NYSE:GME-Free Report), via streaming video games.
New Competition
Sony Corp (NYSE:SNE-Free Report) and Microsoft (Nasdaq:MSFT-Free Report) are moving towards allowing all their games to be rented through their respective consoles. In January of this year, Sony announced the advent of PlayStation Now, a cloud-based system that allows users to use PS2 and PS3 games on the PS4 system, and the handheld PS Vita.More importantly, PlayStation Now will have both subscription and game rental plans.In recently leaked images of PlayStation Now, the rental durations are variable (great news for gamers).
Microsoft was ahead of the live game streaming revolution, but was unable to have it fully functional when the Xbox One launched in November of last year.Over the last four months, Microsoft has fine- tuned their streaming through the Twitch app, and launched the Xbox One version it in tandem with their hit title Titanfall.
The recent streaming advances by both Sony and Microsoft are further exasperated by the continued competition by long time nemeses, Redbox, owned by Outerwall (Nasdaq:OUTR-Free Report), and GameFly, which only add to the competitive problems facing GameStop.
Street View
When word first hit on January 7th of Sony's PlayStation Now, shares of GameStop dropped over 10%. When Wal-Mart announced their used video game program, shares of GME dropped over 5%, and made the company the S&P 500's worst performer on the day.Moreover, since Sony's announcement, short interest (short money players) has increased 41% (through March 14) to just over 35.2 million total shorted shares (up from 17.8 million in January).Adding additional pressure, the research group NPD reported that overall game software sales in the U.S. dropped 9% in February.
Analysts were not too friendly with the earnings adjustments (per share) either; Q1 earnings estimates have dropped from $2.14 to $1.92, Q2 earnings estimates have dropped as well, from $0.60 to $0.54.More strikingly is the annual estimates; 2014 earnings estimates have fallen from $3.24 to $3.02, and 2015 estimates decreased from $4.08 to $3.85.
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
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