gme reports first quarter results tomorrow. current consensus estimates show that analysts are expecting gme to post earnings of 35 cents a share on sales of more than $1.7 billion. a strong sales number is expected due to a number of hit games during the quarter, including "Grand Theft Auto IV" and "Super Smash Bros. Brawl". as always, management's guidance will also be a key focus for investors, as attention shifts toward the second half of 2008 and which games are expected to be major drivers for the company's results. during the company's previous earnings announcement in march, management provided guidance for earnings per share in the $2.25 to $2.34 range for the first-quarter.
expectations are extremely high for gme, but there is still a fair amount of skepticism on wall street. a recent barron's article effectively called a top in the stock, saying that expectations are too high and that looking past "Grand Theft Auto IV," the potential for similar blockbusters is limited.
in this case, the skepticism could actually create additional upside for gme, as video-game spending remains in an uptrend that can be boosted by blockbuster games, rather than being purely dependent on them. obviously close attention will be paid to management's guidance and commentary for insight into its expectations heading into 2009. i'm still long options in gme.