GameStop Gets $700 Million From A Big Sale
GameStop sells off Spring Mobile.
Video game retailer GameStop made a big acquisition announcement today. The corporation confirmed that it sold its major mobile operation, Spring Mobile, for $700 million. GameStop acquired Spring Mobile for an undisclosed sum not too long ago in 2014.
GameStop sold Spring Mobile to Prime Communication, L.P., and as part of the transaction, GameStop unloaded 1,289 of the AT&T Wireless stores that Spring Mobile operates. The deal is expected to close in the fourth quarter of GameStop's fiscal Q4 2018.
The move is part of GameStop's wide "comprehensive review of a wide range of strategic and financial alternatives to enhance shareholder value." After consulting with GameStop's board of directors and outside financial advisors, GameStop management decided it would be in the "best interest of the company and its shareholders" to sell Spring Mobile.
The sale "generates immediate cash proceeds and enables the company to increase its focus on serving its customers' entertainment needs across video games and collectibles."
As of 2014, GameStop was the third-largest AT&T dealer in the United States thanks to its ownership of Spring Mobile, but now that's no longer the case.
Spring Mobile was just one of GameStop's acquisitions outside of gaming. The company acquired Geeknet, the parent company of Think Geek, in 2015 for $140 million. Additionally, GameStop owns the company SimplyMac, which sells Apple products. Outside of acquisitions, GameStop has expanded its own business with the establishment of a publishing label called GameTrust; the label has worked with Spider-Man PS4 developer Insomniac on their game Song of the Deep.
It's intriguing to see GameStop go back to focusing on video games and collectibles, given the company previously talked about how the wireless market was among the most exciting growing markets in all of the consumer marker.
Times have changed in the video game business. Game sales are increasingly trending toward digital over physical, which is theoretically a problem for GameStop, as physical sales--and re-selling games--was for a time the bread and butter of GameStop's business model. Just recently, news broke of Microsoft potentially making an Xbox One without a disc drive, and GameStop's stock price dropped in the wake of this. GameStop's shares jumped back up this week on the news that it was selling Spring Mobile for $700 million. Overall, however, GameStop's share price has been trending downwards for years now.
In June this year, GameStop announced that it was entering "exploratory discussions" with outside companies about potentially selling itself.
Longtime GameStop CEO Paul Raines died in March at the age of 53. He was replaced by Michael Mauler, who himself left after just three months for "personal reasons." Shane Kim, the former boss of Xbox during the Xbox 360 days, is GameStop's current CEO.
In other GameStop news, the company is of course going big for Black Friday--you can see a roundup of all the deals here.
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