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GameStop Shares Drop After Profit Forecast Misses Estimates

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GameStop, the world’s largest retailer of video games, forecast current-quarter profit below analysts’ estimates, sending its shares down 10% in after-hours trading.

The company forecast on Thursday second-quarter profit of 23-30 cents per share. Analysts on average were expecting 33 cents, according to Thomson Reuters.

GameStop (GME), which has said it expected its physical gaming business to continue to decline in 2016, is expanding its technology brands businesses, which sells cellphones and consumer electronics.

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Sales in the company’s physical gaming business have been languishing as videogame publishers push consumers to buy games directly on their videogame consoles instead of at stores.

Sales from new video game hardware business fell 28.8% to $312.9 million in the first quarter ended April 30.

Revenue from GameStop’s technology brands business, which include stores such as Spring Mobile and Simply Mac, rose 62.2% to $165.8 million.

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The company’s net income fell to $65.8 million, or 63 cents per share, from $73.8 million, or 68 cents per share, a year earlier.

Excluding items, the company earned 66 cents per share, beating the average analyst estimate of 62 cents.

Total revenue fell 4.3% to $1.97 billion, but was in-line with analysts’ average estimate.

The company’s shares were down 7.9% at $27.60 in after-market trading.