GameStop reveals 2010 capital allocation program
We know, we know -- you've been sitting around all day worried sick about GameStop. Ever since the recent announcement of a cut profit forecast and the resultant drop in share prices, we've been in exactly the same boat. Good thing then that the company has announced plans to repurchase $300 million in stock from investors as part of its 2010 "Capital Allocation Strategy," with intentions to increase earnings per share by 10 percent.
Wedbush Morgan analyst Michael Pachter sees the announcement as "positive," echoing the company's statement of continued financial growth in 2010. "We believe that industry sales will rebound in 2010 and that GameStop is well-positioned to gain share the first half of the year. The company has high exposure to the hardcore software releases, which we expect to drive market growth in 2010, and comparatively low exposure to hardware, which we expect to decline," he says. It certainly doesn't hurt that GameStop plans to open 400 new stores over the course of the year -- the financials even leave $100 million on the side, reserved for "acquisition activity." It would appear that, at least for now, we can all can stop worrying. Finally.
