Not so fast. The good news originally gave share prices a boost, but they soon fell 6% lower.
On the same day FedEx announced it would be lowering its outlook for the rest of the year due to subdued economic growth. That got people thinking.
"We believe performance will continue to be challenged from relatively weak international economic conditions, late cycle hardware and software consumer fatigue," said National Alliance analyst Mike Hickey in an interview with Reuters.
Analysts are also concerned the rising use of tablets and smartphones will lure gamers away from traditional games and consoles. Sony PlayStation CEO Jack Tretton disagrees, saying they actually function as a launching pad for casual gamers into serious gaming.
But I digress. Microsoft
Business section: Investing ideas
What do you think will happen? Do you think the drop in share price on the same day as positive forecast announcements is fair or overly pessimistic?
Here's a list of companies with exposure to the gaming trend. How do you think they will be affected? (Click here to access free, interactive tools to analyze these ideas.)
1. Activision Blizzard
2. Changyou.com Limited: Develops and operates online games in the People's Republic of China. Market cap of $1.43B. The stock has had a couple of great days, gaining 5.09% over the last week.
3. Electronic Arts
4. Shanda Games Limited: Engages in the development and operation of online games in the People's Republic of China. Market cap of $1.36B. The stock has had a couple of great days, gaining 8.26% over the last week.
5. GameStop: Operates as a retailer of video game products and personal computer (PC) entertainment software. Market cap of $3.16B. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 4.49. The stock is a short squeeze candidate, with a short float at 40.89% (equivalent to 16.5 days of average volume). The stock has gained 10.44% over the last year.
6. International Game Technology: Designs, manufactures, and markets electronic gaming equipment and systems worldwide. Market cap of $4.85B. The stock has had a good month, gaining 13.67%.
7. Microsoft: Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap of $268.46B. The stock has gained 28.7% over the last year.
8. Take-Two Interactive Software
9. Zynga: Develops, markets, and operates online social games on the Internet, social networking sites, and mobile platforms. Market cap of $10.0B. The stock has had a couple of great days, gaining 5.32% over the last week.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
The Motley Fool owns shares of Microsoft, GameStop, and Activision Blizzard. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Microsoft, Take-Two Interactive Software, and Activision Blizzard. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft.
Motley Fool newsletter services have recommended writing covered calls on GameStop. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. The Motley Fool has a disclosure policy.