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Market ‘softness’ harms US giants

Though the trade is still waiting to see how the games sector fared in the hectic festive season, yet another US analyst has lowered its estimates for the industry in 2006.

US firm SG Cowen has reduced its forecasts for Activision, EA and Take 2 following what analyst Lowell Singer described as “an ongoing softness in video game sales”.

He added: “For the third month in a row, video game software sales declined by at least 19 per cent. The softness, due in part to gamers delaying purchases ahead of the Xbox 360 launch, has extended well into December.”

SG Cowen’s former revenue estimate of $1.49 billion for Activision was lowered to $1.38bn, a shift attributed to the underperformance of key titles such as Gun, True Crime: New York City and Tony Hawk’s: American Wasteland.

The firm’s forecast for EA revenues was also lowered from $3.34bn to $2.94bn, again due to the underperformance of titles such as SSX On Tour and From Russia with Love.

Take 2’s estimate was lowered from $1.39bn to $1.33bn.

Despite these gloomy predictions, however, the analyst is still maintaining a positive outlook. “We maintain a long-term positive view on the video game sector, although the console transition is likely to drive volatility in stock performance over the next six months,” Singer concluded.

“Activision is our preferred name in the group due to strong and improving game quality, expected margin expansion and attractive valuation.”

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