Analysts: March a mixed bag for game industry

Industry watchers predict month-end tally will see expanded sales for some as others' bottom line flatlines; Majesco seen as promising investment.

Retail sales statistics for March should be released by NPD Funworld to its customers after the close of the stock market tomorrow. In anticipation, industry analysts from investment firms around the United States are chiming in with their predictions today.

Michael Pachter and Edward Woo of Wedbush Morgan Securities and Boris Markovich of TerraNova Institutional have upbeat views on the industry and on many companies, although they occasionally conflict.

TerraNova's analysts write that "we expect monthly sales for Majesco, Take-Two, THQ, and Activision to be up over 25 percent year on year. We expect an increase for Atari, a flat month for Electronic Arts and a down month for Midway."

On the other hand, Wedbush analysts predicted the following March results:

--Atari is expected to deliver $13 million in sales, up 8 percent.
--Electronic Arts' sales will be $85 million, down 1 percent.
--Majesco sales will be $3 million, up 152 percent.
--Take-Two will deliver $18 million in sales, flat with last year.
--THQ's sales should be $30 million, up 6 percent.

Despite their conflicting views on some companies, both firms expect overall sales growth. In 2004, total March sales of video games reached $414 million. Sales in February 2005 were up 9 percent over the previous year, and both Wedbush and TerraNova are predicting similar growth for March.

One factor that is expected to boost sales is the US launch of the Sony PSP in March. Sony released figures that showed that the PSP sold more than 600,000 units in its first week.

An interesting note in TerraNova's predictions was its strong buy rating for Majesco, which recently changed its stock symbol from MJES to COOL. From TerraNova's report:

"Video game publishing accounts for a little more than 50 percent of the company's revenue base. Over the next several quarters, Majesco will have a number of frontline and value titles released. Based on the strength of the frontline titles in the next several quarters, we believe that our FY05 expectations for the video game business may prove conservative. We identify five drive titles in FY05 which have the potential to perform beyond the company's expectations, driving revenues and margins: Psychonauts, Advent Rising, Jaws, Aeon Flux and Infected."

TerraNova adds that Majesco is the only licensed publisher of Game Boy Advance SP video cartridges, which currently make several Nickelodeon programs watchable on Nintendo's handheld.

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