Pachter: Early 2008 To Maintain Double Digit Growth

In his latest note to investors, Wedbush Morgan's Michael Pachter has said he believes that a strong first quarter lineup will see the first several months of 2008 sustaining the double digit growth the industry has recently enjoyed. Looking back at the major events of December, Pachter says that strong Q3 results and the merger of Activision of Vivendi has assuaged investor concerns, and that "this trend will likely continue in the December quarter with Activision and Ubisoft already raising Q3 guidance significantly." Pachter notes that reported industry sales are thus far up 27 percent, "well ahead of our 19 percent estimate. In order for our forecast to be right, December software sales would have to be down year-over-year (this is highly unlikely), so there should be significant upside to our growth estimates. Should December sales be up a modest 10 percent, overall industry growth will approach 23 percent for the full year." While it's still two weeks to the expected release of NPD's December sales data, Pachter has said Unreal Tournament III, MX vs. ATV Untamed and the PS2 version of Rock Band should be the top releases for the month. Finally, Pachter says, "we expect industry sales to be strong for the first several months of 2008, with the strong release schedule early in the year sustaining double-digit sales growth... This holiday selling season is over, and all signs are that video games were top sellers. We think that once GameStop reports holiday sales (on January 10), video game investors’ concerns about the economy will subside, and we expect the U.S. publisher stocks to continue to appreciate."