A day after EA posted its disappointing quarterly report, video game software shares drop due to fears that companies may fail to deliver profitable titles during the holidays. As a result, retailers are stocking up mostly on AAA-rated titles, and not so much on not-so-anticipated ones, putting less popular games at a disadvantage on the market.

Todd Greenwald, an analyst for Signal Hill, has told investors in no uncertain terms that the "Xbox 360 needs a real price cut." While Microsoft did drop the price of the console in the US by US$ 50, the analyst believes that it isn't enough in the face of the competition. To find out what else he had to say, head on over to the full article.

Call of Duty 4: Modern Warfare (Xbox 360, PS3, PC) has been getting great reception left and right as evidenced by Arvind Bahtia's findings. Bahtia, analyst from Stern Agee & Leach, observes that the title - which was already expected to do well - is outperforming expectations judging from sales.

Bhatia comments that the game will drive sales through the holidays and may even drive up the firm's quarterly estimates for Activision.

Call of Duty 4: Modern Warfare for the Xbox 360, PlayStation 3, and Windows PC launched a few days ago. And from the way things are looking, the title promises to blow its players away in its realistic-yet-engaging mix of contemporary combat and high-definition visuals. But will it have the firepower to take on the likes of FPS juggernauts like Halo 3? Nollenberger Capital Partners analyst Todd Greenwald thinks so. You can catch his statements regarding this prediction in the full article.

It's the general consensus among analysts that Electronic Arts' acquisition of BioWare and Pandemic Studios was a wise move. One of the more popular analysts from Wedbush Morgan, none other than Michael Pachter, also predicts that the US$ 800 million purchase will pay off.

With the purchase of the two developers, Electronic Arts boosts their already solid reputation with "several games in development, six owned franchises, and 800 quality employees." Pachter believes that EA "has finally demonstrated the thinking behind its huge cash accumulation" with the purchase. (EA has nearly US$ 3 billion in cash.)

Pachter continues that if the companies continue with the quality of their past performance then "EA will likely achieve its goal of US$ 300 million in annual revenue." Not bad, not bad at all. Colin Sebastian of Lazard Capital Markets and Todd Greenwald of Nollenberger Capital Partners demonstrate the same confidence in EA, if not as strongly as Pachter does.

One analyst though, Ben Schachter from UBS, believes that we'll have to wait and see whether or not the acquisition was a good move. While he does agree that the acquisition was a good one over the long term, he's concerned that the steep price may have some negative effects on the company's current financial state.

 

Analysts from Wedbush Morgan Securities and Nollenberger Capital Partners believe that Take-Two Interactive's guidance till the end of fiscal year 2007 was thresholds above optimistic. The publishing company recently published its financial performance and delivered hopes that it will continue to improve in the near future, thanks to BioShock and Manhunt 2.

Now although Michael Pachter of Wedbush Morgan said that investor confidence was going strong for Take-Two, he isn't quite ecstatic about the company's positive views for the rest of the fiscal year. He mused that such confidence was misguided and that the company has a lot to make up for in GAAP losses. He now says:

Although it may appear that the company's guidance was better than expected, we believe that the FY:08 consensus estimate was artificially low, and reflected widespread skepticism about the company's ability to deliver solid profits next year.

Todd Greenwald of Nollenberger seems to share that sentiment, stating that Take-Two's quarterly results could have been a little more promising to justify actual confidence. And while the company's cash balance seems to dwindle alarmingly (US$ 138 million in January, US$ 109 million in April, US$ 61 million in July), he does offer that investors wait for more developments to truly judge if their money is worth giving in:

Take-Two delivered July quarter results that were largely in line and provided an FY08 outlook that was disappointing on the top line but better than expected on the bottom line, suggesting big expectations for cost reductions and margin expansion... While the company's earnings outlook for 2008 is impressive, we note that it looks overly optimistic to us; we prefer to wait and see more progress before assuming Take-Two can return to peak gross margin levels in FY08.

 

With the news of Take-Two's biggest gun in the games race, Grand Theft Auto 4 (360 and PS3) being shoved back into its holster until 2008, it's no surprise that analysts are predicting good tidings for those who were supposed to go up against the controversial company in the pre-holiday shootout.

The analyst being none other than Todd Greenwald of Nollenberger Capital Partners, and the rival companies being Electronic Arts and Activision. So why is the delay of Grand Theft Auto 4 a good thing for Electronic Arts and Activision?

Todd Greenwald believes that it frees up budgets that had been set aside for the fourth iteration of the legendary series, and thus giving room for other blockbuster titles currently out or will be out this season. Good ol' Todd puts it like so:

We believe the lack of GTA IV this holiday season is a clear positive for Take-Two's competitors, namely EA and Activision. We estimate that roughly US$ 400 to US$ 500 million in consumers wallets will be freed up to spend on other hardcore games.

While it's certainly a bit disappointing that Grand Theft Auto 4 has been pushed back well into next year, it certainly does give us gamers (especially those of us in a tight budget) a chance to splurge on other great-looking releases, with Call of Duty 4, Halo 3 and Assassin's Creed to only name a few. Let's just hope that Take-Two won't be pushing the title's release date any farther.

 Analysts have had the chance to air their predictions prior to this year's E3 in Santa Monica, where some of the forecasts held true while the others swung and missed. Gamespot ran an article recently on the impressions of familiar analysts on Sony, Nintendo and Microsoft's announcements.

Kicking things off for the think tank, Nintendo impressed everyone with the announcement of some new accessories for their Wii game console. The Zapper gun drew some attention and nobody could whine about the Mario Kart Wii steering wheel. But what got everyone riled up was upcoming biggie Wii Fit and the seemingly ingenious Balance Board set to ship with it.

 Wii Fit and its Balance Board "looks good and will appeal to the casual audience that Nintendo is tapping into," says Colin Sebastian of Lazard Capital markets as he observed the Kyoto-based company's successful press conference.

Other analysts like Nollenberger Capital Markets' Todd Grunewald agree. He comments "Wii Fit should expand the market even further for Nintendo, and maybe some nimble publishers like Ubisoft and Majesco can benefit from it. I don't think it will be as big as Brain Age or Wii Sports, though."

Meanwhile, Wedbush Morgan's Michael Pachter admits he was wrong with his prediction of a price drop announcement for the Microsoft Xbox 360, saying that the firm may have decided that it was best not to do it for the meantime. Doing a price drop at the same time when they announced an extended warranty for the console could send wrong signals about the quality of their wares.

His counterparts in the other firms agreed that right now, there's no compelling reason for Microsoft to lower its prices. Sebastian, however, says that the drop may not have to wait too long to happen as he predicts it to occur sometime during the summer.

As for the Sony PlayStation 3, analysts welcomed the recent reduction in retail pricing, but said that a stronger line of games was necessary if the kings of the last two game console cycles want to make a three-peat. Analysts have marked 2008 as the mist crucial time frame for the system.

Aside from the usual "PS3 price cut" consensus of like-minded investment security analysts all over the world, Todd Greenwald also expects that other consoles like Microsoft's Xbox 360, Sony's PS2, and handheld PSP will also see a price cut within the year.

 

Of course, the Nollenberger Capital Partners analyst has stated this while tossing two pennies out the door, but it seems apparent that he did make gradual observations of the popular consoles to date before making his opinion known. A report by Games Industry also pegged that he hasn't made any mention of Nintendo's low-priced, popular console.

But seeing as both the Nintendo Wii and DS still continue to sell like hotcakes even while demand continues to grow, Greenwald doesn't expect Nintendo to even think the concept of price cuts. It appears that Greenwald has his money on Microsoft making the first move, seeing as its console has been out a year early.

He expects the Redmond giant to slash US$ 50 right off the retail price of the Xbox 360 by the end of summer. And he believes it will occur over all SKUs, bringing the basic package right on par with the price of a Nintendo Wii, while offering just a US$ 100 heftier option for a Pro package.

Microsoft might be able to pull it off, seeing as hardware costs have already reduced in the 18 months that the Xbox 360 has been out, says Greenwald. He also expects cash cow Halo 3 from Bungie to cover any possible loss, either in sales of the software or a boost in sales of the hardware because of the impact of the software.

If Microsoft does attempt a price drop, Sony will probably be forced to "give in" to the immense pressure brought on by the competition. He eyes a US$ 100 price drop for the PS3, also expecting Rockstar Games' Grand Theft Auto IV as a catalyst to financially aid the price drop expected this fall.

But he noted that publishing giant Electronic Arts will take the most profit out of the PlayStation 3 price drop. He also expects that the PS2 would drop to a US$ 99 price tag by the holiday season, and predicts that the PSP could also follow another slash in retail price, queued by the rumors of a PSP redesign.