Editor's note: In a previous version of this article, several mentions of GameStop and Electronics Boutique were inadvertently reversed. We apologize for the error.
Video game software and hardware purveyor and Motley Fool Stock Advisor selection Electronics Boutique
The earnings figures from the company's press release are a revenue increase of 23.9% versus last year and an earnings-per-share decline from $0.16 to $0.06, or a decline of 62.5%. If you take out the expenses associated with the company's planned merger with GameStop
What's not disclosed in the company's earnings release is how much of the revenue gain was derived from Jump. It may be just me, but I read this as the company trying to have it both ways -- exclude the one-time costs associated with the acquisitions but take any potential revenue benefits from the Jump business that may have been there this quarter.
On the whole, Electronics Boutique has a sound, or what some may call conservative, balance sheet. Cash and equivalents are down from six months ago because of the acquisitions, but up from the same period last year. On the plus side, the inventory growth was in line with sales growth.
The wind is at the back of the video game industry, and most of the players in the market should only grow in future years. Still, there remains plenty of competition both online and off from Amazon
Whether the strategy proves to be beneficial or not is open to debate, and given the sparse disclosure in the earnings release -- limited balance sheet, no statement of cash flows, no conference call announcement -- investors will want to pay close attention to the 10-Q when it comes out in the next couple of weeks to see how the business is doing with its acquisitions. As things stand now, investors know they have revenue growth and, even by the company's best numbers, an earnings decline. That's not the end of the world, but it does raise questions about the strategy and execution at the company.
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