Publisher Share Prices Hit by 360 Stock Cut

The share prices of a number of prominent third party publishers, including Electronic Arts, THQ, Take-Two and Activision, have fallen significantly, following the announcement on Friday that Microsoft was cutting its Xbox 360 shipping target for the fiscal year ending June 30th. Microsoft announced that the company’s previous target of 13 to 15 million units shipped by the end of the fiscal year had been cut to a total of 12 million. Lazard Capital Markets' Colin Sebastian had suggested on Friday that the overall impact on software sales, resulting from the cut, would be negligible. However, a Reuters report shows that third party publishers have been hit by the news with THQ share price falling by as much as 4 percent (bouncing up slightly to $31.04 early in Monday trading) and Take-Two’s by 2.3 percent (and down slightly further to $16.80 on Monday). Electronic Arts also fell by 1.7 percent (to $49.00 in early Monday trading) and Activision by 2.3 percent (to $17.00 early Monday). The latter fall was despite positive results from the company’s third quarter results on the same day. The report quotes a client note from American Technology Research analyst Paul-Jon McNealy in which he suggests, "Video game publishers will be under pressure today after Microsoft cut its life-to-date shipment... There is investor concern about a re-set of expectations around both the Xbox 360 and the Sony PlayStation 3.”