It's time to kiss Electronics Boutique
Investors have had plenty of time to craft their eulogies since the deal was first announced six months ago. On paper, it makes perfect sense, since the two specialty retailers will now be able to cherry-pick the best operating strategies in each chain and apply them to the merged company.
However, this union also comes at an interesting time in the video game sector. Microsoft
The new company will oversee a video game empire with more than 4,000 locations worldwide. It's not exactly the 7,000-unit RadioShack
The stock was singled out 13 months ago as a recommendation in Motley Fool Stock Advisor. It proved to be a rewarding selection, soaring 90% higher in that time. GameStop has also been a healthy riser in that time. It may lead one to question whether the perceived synergies will be more than enough to justify the market's recent enthusiasm in the companies. I would watch the holiday quarter very carefully, since strength in the handheld market may not be enough to compensate for hesitant shoppers approaching the console adoption process with caution during this early part of the next cycle.
That's my near-term concern. In the long run, however, it's going to be a great pairing. Once all three consoles get up and running with established bases and higher software title selling prices, the new GameStop should be a relative winner in what has been a cold retailing sector of late.
Longtime Fool contributor Rick Munarriz loves playing video games but doesn't own shares in any of the companies mentioned in this story. T he Fool has an ironclad disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.