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Lazard: Feb Sales Up 25-30% On 360 Exclusives
by Jason Dobson
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March 15, 2007
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In his latest note to investors, Lazard Capital Markets' Colin Sebastian expects the NPD's February software sales results scheduled to be released later today will show a 25-30 percent rise, driven by Xbox 360 exclusives Crackdown and Lost Planet, as well as Nintendo's Wii Play and 2K Game's movie inspired Ghost Rider.
Commented Sebastian, “Today after the market close, NPD is scheduled to release February sell-through data for console and handheld software and hardware. Our directional forecast suggests that software sales could be up 25%-30% year over year, driven by incremental sales of next-generation software (Xbox 360, Wii and PS3) as well as solid PS2 and Nintendo DS game sales.”
Other titles called out by the analyst as of particular importance to February sales include previous holiday window releases such as The Legend of Zelda: Twilight Princess for the Wii and GameCube, as well as Call of Duty 3, WWE Smackdown vs. Raw 2007, Rainbow Six Vegas, and various EA Sports titles.
The analyst added: “We believe console hardware unit sales remained solid in February, with approximately 400k Nintendo Wii’s (still in short supply), 300k PS2s, 275k Xbox 360s, and 200k PS3s. We also believe DS handheld sales remain strong, while we expect Sony to focus more attention on expanding the PSP market in 2007.”
Looking at individual publishers, Sebastian wrote that Lazard expects Activision's sell-through to be up by approximately 40 percent for the period, driven by sales of Guitar Hero 2 and Call of Duty 3. The group also continues to expect a “robust lineup” of titles from the publisher, including movie based releases Spider-Man, Shrek, Transformers, and Bee Movie, as well as sequels to Tony Hawk, Guitar Hero, and Call of Duty.
The group expects less positive results from major publisher and developer Electronic Arts, with results down 5-10 percent in February with releases such as NBA Street Homecourt, Arena Football, SSX Blur and MVP 07 NCAA Baseball. However, Lazard continues to expect a that the company's 2008 product lineup “should lead to a year of solid growth and margin expansion” for EA going forward.
Finally, the analyst commented that THQ's February sell-through should be up nearly 40 percent, driven by strong sales of WWE Smackdown vs. Raw 2007 and Cars as well as “solid third-party market share” on the Wii and Nintendo DS. Sebastian added that following a “very strong” 2006, the group anticipates “slower, but solid growth in 2007” for THQ, with new releases such as Supreme Commander, Ratatouille and Frontlines Fuel of War, along with sequels to WWE Smackdown, Juiced, Stuntman and Nickelodeon franchises.
Lazard has maintained its “buy” rating for each of these companies, as well as for major retail outlet GameStop, as Sebastian explained, “We believe the fundamental underpinnings remain intact for healthy 15%+ industry growth in 2007. We also believe there is long-term upside potential in shares of software publishers and specialty retailer GameStop, with accelerating growth expected in the next-generation console cycle.”
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