Gamestop 4Q12 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$GME 4Q12 Conference Call Notes

“Without question, a very challenging year for the console gaming industry. NPD data for the industry indicates a 21% decline in software and a 25% decline in hardware in the past year in the United States, with similar numbers in our other geographies. GameStop outperformed the industry globally, confirming once again the unique nature of our business model and position in the market.”

“We have returned over 100% of our significant cash flow for the last 3 years to shareholders, and expect that strategy to continue.”

“Comparable store sales for the year were down 8%, with U.S. comps down 8.7% and international comps down 6.4%”

“we expect the first half of the year to be very difficult, as we wait for the next console cycle to begin, and face the declining demand that typically occurs after new consoles are announced. With Grand Theft Auto V, Battlefield IV releasing in the third quarter, and the PlayStation 4 launching in the fourth quarter, we expect a return to growth for the back half of the year.”

“Our consumer research shows extremely strong consumer interest in the new consoles.”

“purchase interest for the new PlayStation 4 is very strong. In fact, across a wide range of products, including new smartphones, new tablets, laptops, et cetera, the PlayStation 4 is by far the top scoring item.”

“There’s been a lot of talk about how it was the end of the console era, there would never be another console, and that now has become, will these consoles be as compelling? What we believe is, that there’s been a lack of innovation because of the length of the cycle. And we’re in a Tablet business where we see innovation really rapid-fire, and in the Phone business, we see a lot of innovation. So to us, the most exciting part of what’s coming is the fact that we’re reintroducing innovation to a massive install base. And Mike Hogan’s intent to purchase data would tell you, there’s a lot of pent-up demand.”

“the power that the new consoles have are really driving a whole new wave of developer innovation. So based on early games that we’ve seen running on the new platform, the physics are absolutely amazing. I mean, it — the games are getting to be so realistic and movie-like, it’s absolutely amazing. Social, the tie-in of social features is very strong, the ability to share the game, the kill shot that you just executed, and to share that with your friends immediately is amazing. And then the connectivity, I think, has come a long way. Gaming, as you know, is incredibly social. I think the new platforms add to that, and that connectivity will be easier than it’s ever been. And those are definitely the key things. I think that the controller that Sony has rolled out, the proprietary controller, the new controllers that they have, is very clever and I think it’s very — it will make gaming a whole new experience.”

“all the feedback from developers is, [playstation 4] is a tremendously friendly device to code for, and to really create innovation for. So they’ve — they’re really making a big push around making it a developer-friendly gaming device.”

“consumers have a very strong point of view around this. They want portability of their games, and they like trade credits, et cetera. So that’s been clear, that’s not a debate, that’s obvious.”

“60% of consumers have serious concerns that there is no transferability on games”

“Don’t forget that trade credits make video gaming a billion-dollars bigger business, because we provide that trade credit back.”

“The amount of customers who will bring us electronics to buy a PS4 is going to be a big number. And all of our console partners want a part of that, and they see the benefits of that.”

“I think, for me, the real benchmark is the fact that our PowerUp members are saying that they’re much, much more likely, and more excited about buying a PlayStation 4, even than around getting a new smartphone, a new tablet, a new laptop, all the other things they could buy.”

“I think where you’re really going to see Wii U take off is when there is a strong first-party title, that’s what we’ve always seen. And the fact that we really did launch without a strong first-party title, I think we’re seeing the ramifications of that today”

“And don’t forget, Nintendo has a massive IP.”