GameStop Announces Stock Split To Attract Investors

Officials from major U.S. retailer GameStop have announced that the company’s board of directors approved a two-for-one stock split of the company’s common stock to be effected in the form of a stock dividend. The stock dividend will be payable on February 20, and stockholders will receive one additional share of common stock for every share held on the record date. The additional shares will be distributed on March 16, 2007. The company will have approximately 152 million shares of common stock outstanding after the split. The stock split is GameStop’s first since becoming a publicly traded company in February 2002. The news comes following the company's reporting of a 29 percent increase in sales to $1.7 billion for the 9 weeks ending December 30, 2006, up from the previous year's $1.3 million. In addition, the retailer's Board of Directors also authorized an additional $150 million for the buyback of Senior Floating Rate Notes and Senior Notes, with the timing and amount of the repurchases to be determined by the company’s management at a later date. "As GameStop continues to rapidly grow, we wanted to make our stock more attractive to a broader range of potential investors," commented GameStop's chairman and CEO R. Richard Fontaine. "This stock split also reinforces the confidence that the Board and I have in the GameStop buy, sell, trade strategy and the future of video game growth worldwide." [UPDATE: A note from analyst firm Sterne Agee received by Gamasutra adds: "We believe the company had completed its previous $100 million debt buyback program by the end of 2006, and we estimate the total debt level had decreased to approximately $875 million." In addition, the firm comments of the major U.S. game retailer: "We are reiterating our Buy rating and price target of $64, which is based on 25x our FY07 EPS estimate of $2.56." GameStop's stock is currently trading at $52.83, down about 70 cents on the day.]