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Upcoming hardware to reignite GameStop growth - analysts

Sterne Agee and Wedbush Securities predict GameStop will see strong sales in 2012 and beyond as new hardware enters the market, as one analyst predicts retail-friendly disc-based next-gen hardware.
With GameStop's flat holiday sales numbers falling roughly in line with analyst estimates, analysts with both Sterne Agee and Wedbush Securities predict the company will see strong sales in 2012 and beyond as new hardware enters the market. As digital distribution rises in popularity GameStop's largely disc-based business model has come under scrutiny by investors. But the analysts argue that the leading video game retailer, which has made steps towards expanding its digital business, will continue to play a prominent role in the games industry. Wedbush's Michael Pachter agreed with GameStop's explanation that revenues suffered from slow Wii software sales and a lack of new hardware, but noted that the company is poised for a strong 2012 with the PlayStation Vita, the Wii U and perhaps other unannounced hardware on the horizon. Sterne Agee was similarly optimistic, and believes it's possible for Microsoft and/or Sony to announce new home consoles at this year's E3 in June, with the devices potentially launching in late 2013. The firm also says it has reason to believe that new consoles from both manufacturers will continue to rely on physical media. If this comes to fruition, GameStop's new hardware sales could see a healthy boost well past this year. In addition, Wedbush said that it expects sales for digital games, used games, tablets, and mobile devices to remain strong through 2012, further positioning GameStop for a strong year. In late 2011, GameStop announced that its smartphone trade-in initiative was exceeding company expectations, and in November the company revealed that it had sold 600,000 Call of Duty Elite subscriptions as part of its growing digital business.

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