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11/21/14 04:13:38 PM
MARKET MOVERS

Movers: GameStop Corp., The Gap, Inc., GameStop Corp.

GameStop Corp.(GME) : GameStop Corp. (NYSE: GME) reported its third quarter earnings on Friday. Shares of the company are down 13 percent. Below are some key highlights from its conference call. Our consolidated sales were $2.09 billion, down 0.7% from the prior year quarter, with the comp decrease of 2.3%. Consolidated net earnings for the third quarter, excluding divestiture costs related to Spain were $64.3 million, a decrease of 6.3% from last year. Adjusted diluted earnings per share for the quarter were $0.57. We estimate that the impact of the movement of Assassin's Creed had a comp impact of over 2%, and an EPS impact of at least $0.05, given the sales we had in the first five days after launch. We are forecasting same-store sales for the fourth quarter ranging from negative 5% to plus 2% given that we are comping the launch of the next-gen consoles from last November. We expect the full year comps to come in plus 2% to plus 4%. We expect diluted earnings per share to range from $2.08 to $2.24 for the fourth quarter, an increase from $1.89 last year. We are revising our previous full year 2014 earnings per share guidance of $3.40 to $3.70 to a new range of $3.40 to $3.55. The decline in prior gen software sales due to the transition to next-gen consoles has been steeper than expected and titles that moved out of 2014 will both have an impact on our results this year. International comps were plus 3.1% with a positive comp of 8.4% in Australia and New Zealand. The U.S. comp was down 4.8%. New hardware sales increased 147.4% based on the continued strength of the next-gen console adoption. The adoption rate continues to grow on a monthly basis, as we measure sales compared to the same point in the last cycle. We outperformed the U.S. market leading to a hardware share gain of 390 basis points. The primary reason for the decline in new software sales of 34.4% was the comparison of this quarter's hit titles to those of the third quarter of last year. We achieved over 47% software market share in the quarter. Our second highest quarterly share ever behind only last year's third quarter. Pre-owned sales increased 2.6% compared to the prior year quarter. The U.S. was up 2.2% and international was up 5.2% or 9.8% excluding FX impact. This marks the third consecutive quarter that pre-owned business has grown and we expect this trend to continue throughout 2015 as value-oriented consumers find great deals in Xbox 360s and PlayStation 3 and in pre-owned next-gen consoles and software. Our digital receipts were $210 million, a 52% increase over the third quarter of last year with over 80% growth in international driven by console digital sales associated with Destiny and FIFA. We ended the quarter with 6,664 stores, 4,183 U.S. videogame stores, 2,073 international videogame stores, and 408 Technology Brands stores, which include 311 AT&T branded stores operated by Spring Mobile, 51 Cricket stores and 46 Simply Mac stores. We opened 5 videogame stores and closed 19 in the U.S. and opened 11 and closed 120 internationally, which includes the changes in Spain. We added 55 Tech Brand stores through acquisitions and opened 34 more. During the third quarter, we repurchased a $144 million of our stock with 3.6 million shares at an average price of $40.25. Year-to-date, we've repurchased 6.8 million shares at an average of $39.90 for a total of $271.7 million. Our guidance for the year was to buyback between $250 million and $300 million. Life-to-date we repurchased 67.4 million shares at an average price of $24.36 for a total of $1.64 billion. Multi-channel grew 20% during the quarter led by 91% growth in our pickup at store program where customers can hold their product online and conveniently pick it up at a local store. Mobile transactions increased by 79% and 69% of our online traffic is now coming from a mobile phone or tablet. We released a major upgrade to the GameStop mobile app and with over 6.1 million installs, this app makes it easier to research products, find local stores, track pre-orders and manage your PowerUp Rewards account and game library. 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



The Gap, Inc.(GPS) : The Gap Inc. (NYSE: GPS) came with worse-than-expected third-quarter results on Thursday and reduced its forecast for next year. Additionally, the company announced new global presidents of both the GAP and Banana Republic unit. This was a bad farewell to the outgoing CEO of GAP, Glenn Murphy, who will be replaced by Art Peck, currently the President of Growth, Innovation and Digital, at the company. Cross Ledge Fund manager, Lori Wachs, was recently on Bloombergto discuss the dismal performance of the company and its future outlook. "He [Art Peck] has had such breadth and depth of experience across the Gap platform and his almost decade at the company. So, he is certainly coming in with the right tools. I think the change at the top of Banana Republic and Gap brand are him starting to put his imprint on it, even before he takes the helm in a few months." On the profiles of the new global presidents, Jeff Kirwan and Andi Owen, Wachs said, "well, one of them comes from international expansion into China which actually Art Peck was the first person to spearhead and the other is coming from the outlet division." "You see this, as they groomed Art Peck to take over the different division during his time, this is what they're doing and I would imagine given his background in both of those areas, these are the people he has worked closely with in the past and has a lot of confidence in them," Wachs added. The Gap recently traded at $38.02, down 5.3 percent. 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



GameStop Corp.(GME) : Markets in the United States rose sharply on Friday as traders welcomed news of an interest-rate cut in China and the possibility that Europe's central bank would increase its efforts to stimulate economic growth in the region. The rally had the Dow Jones industrial average and Standard & Poor's 500-stock index on pace to extend their record highs from a day earlier. KEEPING SCORE In early afternoon trading, the Dow was up 0.32 percent and the S.&P. 500 was up 0.29 percent. The Nasdaq composite index gained 0.12 percent. THE QUOTE A strong third-quarter earnings season, on top of a recent string of positive United States economic data on housing, jobs and manufacturing, have helped push the market higher since mid-October. Now the potential for more economic stimulus out of China and Europe makes stocks even more attractive, said Mike Serio, regional chief investment officer at Wells Fargo Private Bank. "Central bank intervention is the No. 1 thing investors worldwide are looking at right now," he said. "In the short run, that looks pretty good for stocks." SECTOR VIEW Eight of the 10 sectors in the S.&P. 500 index rose, with materials stocks climbing the most. The design software company Autodesk led the gainers, with its shares adding 6.8 percent. Utilities and telecommunications stocks declined. EARNINGS SURPRISES Investors bid up shares in several companies that reported better-than-expected earnings. Shares of the software maker Splunk rose 5.3 percent. Shares of the sporting goods retailer Hibbett Sports gained 7.7 percent. EARNINGS MISSES Shares in Aruba Networks fell 12.3 percent after the wireless communications company's outlook fell short of financial analysts' expectations. The Gap and GameStop also reported quarterly financial results that fell short of forecasts. GameStop shares tumbled 12.2 percent and stock in the Gap shed 5.4 percent. GOING, GOING, GONE Shares of Sotheby's added 7.9 percent a day after its chief executive, William Ruprecht, announced he would step down and that the New York auction house's board had started a search for its next chief executive. BOARDROOM DEALDow Chemical agreed to add four new members to its board of directors after pressure from the hedge fund activist Daniel Loeb's Third Point. The stock rose 2.4 percent. CHINA RATE CUT China's central bank cut the interest rate on its one-year loans to financial institutions by 0.4 percentage point to 5.6 percent. The surprise reduction came after recent figures showing that the country's annual rate of economic growth slowed to a five-year low of 7.3 percent. Many analysts think a key motivation behind the rate cut is the recent steep decline in the value of the Japanese yen, which is likely to impact on China's exports. DRAGHI MOVES MARKETS The European Central Bank president Mario Draghi also caused a stir in markets when he told a conference in Frankfurt that the bank was willing to "step up the pressure" and increase its efforts to stimulate the struggling economy. The comments fed market expectations for more stimulus, sending the euro lower and stocks higher. If current efforts do not achieve the desired effect, Mr. Draghi said the central bank could "broaden even more the channels through which we intervene." For many in the markets, that was a clear hint that the bank could soon starting buying government bonds. His comments prompted the euro to fall sharply. In early afternoon London trading, Europe's single currency was down 0.9 percent at $1.2432. OVERSEAS MARKETS In Germany, the DAX jumped 2.6 percent and in France, the CAC 40 gained 2.7 percent. The FTSE 100 was up 1.1 percent in Britain. In Asia, the Nikkei 225 closed up 0.3 percent in Japan, while in Hong Kong, the Hang Seng gained 0.4 percent. The Kospi was up 0.4 percent in South Korea. ENERGY The price of crude oil rose following the Chinese rate cut and stimulus talk out of Europe. Benchmark United States crude fell 9 cents at $75.76 a barrel in New York. BONDS Bond prices rose. The yield on the 10-year Treasury note fell to 2.32 percent.



Scientific Games Corporation(SGMS) : Combination Creates Premier Gaming & Lottery Entertainment and Technology CompanyExecutive Leadership Team Announced LAS VEGAS & NEW YORK--(BUSINESS WIRE)-- Scientific Games Corporation (NASDAQ: SGMS) ("Scientific Games" or the "Company") announced today that it has completed the merger with Bally Technologies, Inc. ("Bally"). The aggregate transaction value was approximately $5.1 billion, including the refinancing of approximately $1.8 billion of existing Bally net debt. "Completing the Bally transaction brings together two exceptional organizations with a common culture of innovation and customer focus," said Gavin Isaacs, President and Chief Executive Officer of Scientific Games. "We are excited by the opportunities that will be created by combining each organization's core strengths in developing engaging gaming entertainment products, advanced technologies and systems, and providing value-added services to help our customers grow their revenues." "Our mission is to become the premier gaming and lottery entertainment and technology company in the world by offering gaming and lottery operators a comprehensive and differentiated portfolio of high earning, player-appealing games and technology solutions," Mr. Isaacs continued. "By leveraging our excellence in the development of imaginative gaming entertainment with value-added services, we seek to become the partner of choice for our gaming and lottery customers. Further, by pursuing continuous improvement in our business processes, we expect to enhance our margins, grow free cash flow to reduce our debt, and build long-term value for our stockholders." New Executive Leadership Team Appointed The Company also announced today its executive leadership team. The executive team will oversee an organization comprised of three operating units: Gaming, Lottery and Interactive. In addition to President and Chief Executive Officer, Gavin Isaacs, and Executive Vice President and Chief Financial Officer, Scott Schweinfurth, the executive leadership team of Scientific Games will include: The executive leadership team can be found on the Company's website, here. Mr. Isaacs added, "Our new senior management team comprises some of the most accomplished executives in the gaming, lottery and interactive industries. I am very excited to have this team of great leaders from Scientific Games, WMS, Bally and SHFL entertainment, Inc. ("SHFL") helping to lead the Company forward. Our new organizational structure will focus on driving consistent and measurable progress on our goals of increasing profitable global growth and increasing free cash flow to pay down debt. The experience, leadership skill and commitment that each of our senior leaders brings to the Company will be a significant influence in our integration efforts and development of solutions to bring value to our customers and shareholders." Under Mr. Mooberry's leadership, the Company's Gaming group will comprise the WMS, Bally, SHFL and Scientific Games gaming businesses that serve casino and other gaming operators worldwide. Under Mr. Kennedy's leadership, the Lottery group will comprise the existing Scientific Games lottery operations, including its Instant Products, Lottery Systems, Interactive Lottery and MDI businesses that serve lottery operators worldwide. Under Mr. Levin's leadership, the Interactive group will comprise the Scientific Games and Bally interactive social gaming operations, including Jackpot Party Social Casino, Gold Fish Social Slots, Dragonplay Slots, and Dragonplay Live Hold 'Em Poker, and the Williams Interactive, Bally and SHFL real-money online gaming businesses. Messrs. Mooberry, Kennedy and Levin will each report directly to Mr. Isaacs. About Scientific Games Scientific Games Corporation (NASDAQ: SGMS) is a leading developer of technology-based products and services and associated content for worldwide gaming and lottery markets. The Company's portfolio includes instant and draw-based lottery games; electronic gaming machines and game content; server-based lottery and gaming systems; sports betting technology; loyalty and rewards programs; and social, mobile and interactive content and services. For more information, please visit www.scientificgames.com. Forward-Looking Statements In this press release, Scientific Games makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate," "should," "could," "potential," "opportunity," "goal," or similar terminology. These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things: competition; U.S. and international economic and industry conditions, including declines in or slow growth of lottery retail sales or gross gaming revenues, reductions in or constraints on capital spending by gaming or lottery operators and credit risk relating to customers; slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines; ownership changes and consolidation in the casino industry; opposition to legalized gaming or the expansion thereof; ability to adapt to, and offer products that keep pace with, evolving technology; ability to develop successful gaming concepts and content; laws and government regulation, including those relating to gaming licenses and environmental laws; inability to identify and capitalize on trends and changes in the gaming and lottery industries, including the expansion of interactive gaming; dependence upon key providers in our social gaming business; retention and renewal of existing contracts or entry into new or revised contracts; level of our indebtedness, higher interest rates, availability and adequacy of cash flows and liquidity to satisfy obligations or future needs, and restrictions and covenants in our debt agreements; protection of our intellectual property, ability to license third party intellectual property, and the intellectual property rights of others; security and integrity of our software and systems and reliance on or failures in our information technology systems; natural events that disrupt our operations or those of our customers, suppliers or regulators; inability to benefit from, and risks associated with, strategic equity investments and relationships, including (i) the inability of our joint venture to meet the net income targets or otherwise to realize the anticipated benefits under its private management agreement with the Illinois lottery, (ii) the inability of our joint venture to meet the net income targets or other requirements under its agreement to provide marketing and sales services to the New Jersey lottery or otherwise to realize the anticipated benefits under such agreement (including as a result of a protest) and (iii) failure to realize the anticipated benefits related to the award to our consortium of an instant lottery game concession in Greece; failure to achieve the intended benefits of the acquisition of WMS, including due to the inability to realize synergies in the anticipated amounts or within the contemplated time-frames or cost expectations, or at all; inability to complete future acquisitions; inability to successfully integrate future acquisitions; litigation relating to the Bally acquisition; disruption of our current plans and operations in connection with the Bally acquisition, (including in connection with the integration of Bally), including departure of key personnel or inability to recruit additional qualified personnel or maintain relationships with customers, suppliers or other third parties; costs, charges and expenses relating to the Bally acquisition; inability to successfully integrate Bally (including SHFL and Dragonplay Ltd.); failure to realize the intended benefits of the Bally acquisition, including the inability to realize the anticipated synergies in the anticipated amounts or within the contemplated time-frames or cost expectations, or at all;; incurrence of restructuring costs, revenue recognition standards and impairment charges; fluctuations in our results due to seasonality and other factors; dependence on suppliers and manufacturers; risks relating to foreign operations, including fluctuations in foreign currency exchange rates and restrictions on the import of our products; dependence on our employees; litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems, our employees, intellectual property and our strategic relationships; influence of certain stockholders; and stock price volatility. Additional information regarding risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including under the heading "Risk Factors" in our most recent Annual Report on Form 10-K. Forward-looking statements speak only as of the date they are made and, except for Scientific Games' ongoing obligations under the U.S. federal securities laws, Scientific Games undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Investor Relations:Scientific GamesBill Pfund, +1 847-785-3167Vice President, Investor Relationsbill.pfund@scientificgames.comMedia Relations:Mollie Cole, +1 773-961-1194Director, Corporate Communicationsmollie.cole@scientificgames.comorBally Technologies, Inc.Mike Trask, 702-532-7451Mobile: 702-330-6679Sr. Manager, Corporate CommunicationsMTrask@ballytech.com Source: Bally Technologies, Inc. & Scientific Games Corporation



Autodesk, Inc.(ADSK) : In a report published Friday, Bank of America analyst Kash Rangan reiterated a Neutral rating on Autodesk, Inc. (NASDAQ: ADSK), and raised the price target from $62.00 to $63.00. In the report, Bank of America noted, "ADSK beat revenue and EPS estimates ($618mn vs. our/cons est. of $598/$602mn, and $0.25 vs. our/cons est. $0.20/$0.22) with license upside. Deferred revenue and total subs were also stronger, topping $1bn and 2.13mn, respectively. ADSK increased FY15 guidance, raising revenue growth from 7-9% to 9-10%, billings growth from 10-12% to 15-17%, and net sub adds from 200-250K to 325-375K. Net sub adds were 96K ex. 25K from Delcam, and deferred revenue was higher by $25.4mn driven by LT deferred (from an eight-figure deal) rather than ST upside." Autodesk closed on Thursday at $58.41. View More Analyst Ratings for ADSKView the Latest Analyst Ratings 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



Best Buy Co., Inc.(BBY) : A: Traders aren't sure how to handle Best Buy. The seller of consumer electronics faces many challenges, but it periodically throws the bears by showing some signs of strength. Doubters of the company were sent scrambling Thursday after Best Buy reported an adjusted third-quarter profit of 32 cents a share, blowing away estimates by 28%. Shares of Best Buy on Thursday jumped $2.48, or nearly 7%, to close at $38.02. The stock is now down less than 5% this year, recovering from the big sell-off early in the year. Analysts were pleased the company has stemmed the revenue declines and is starting to get profit moving higher again. During the third quarter, revenue inched up 0.2% to $9.4 billion. And currently, analysts see Best Buy having a solid holiday quarter, with revenue expected to rise 0.5% to $14.5 billion. The company is having better luck on the bottom line, as profit is expected to gain nearly 9% in the fourth quarter to an adjusted $1.35 a share. Given that the company seems to have stemmed the pain, analysts are bullish on the stock. The average analyst rates Best Buy shares "outperform." But analysts, too, are having trouble getting behind Best Buy. The average 18-month price target is $37.94, which is about where the stock is now.



 

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