Microsoft says XBox on track as game shares slip

Ben Berkowitz

LOS ANGELES: Microsoft Corp. repeated on Monday that the US release of its

XBox game console was on track for November, after widespread but

unsubstantiated talk of a delay in the rollout weighed on shares of game

publishers.

Some analysts dismissed the slip in game software shares as profit taking in

a sector which has had a strong year, outperforming the broader market for

technology stocks.

For its part, Microsoft said the November US launch date for XBox remains

unchanged and analysts said that any potential delay was more likely for the

console's launch in Japan, a market where Microsoft has not specified a release

date.

Even so, Monday's sell-off in game publishing shares, which have rallied

strongly since the first quarter, was sharp for several stocks in the sector,

including THQ Inc. and Activision Inc. THQ shares closed down 6.8 per cent, at

$50.19. It was the largest single-day decline in over a month and took the stock

below a trendline that had provided support since late February.

Shares in Activision closed down 6.8 per cent, at $35.06, breaking through a

upward trendline from early April. Interplay Entertainment Corp. shares ended

down 7.6 per cent, at $1.46. A Microsoft spokesman said the software giant is

"still on track for a November 8 launch," of the next-generation game

console in the US, a date it first announced at the E3 gaming convention in

June.

Microsoft still plans to sell 600,000 to 800,000 XBox units between that

launch and year-end, the peak of holiday buying, said James Bernard, the

Microsoft spokesman. "I think there is substance (to the rumor), but not

exactly what's (being) bantered around," said Miguel Iribarren, an analyst

with Wedbush Morgan Securities, who said it was possible that the XBox release

would be delayed in Japan.

Microsoft will announce the Japan release date later this year, Bernard said.

Most analysts have expected the XBox to debut in Japan in the first half of

2002. Other publishers with smaller losses on Monday included Take-Two

Interactive Software Inc., down 2.3 per cent, at $20.45, and Electronic Arts

Inc., down 2.7 per cent, at $53.10.

Some analysts were dismissive of the talk of a delayed XBox launch, even in

the Japan market, noting that US publishers such as THQ have no plans to sell

XBox games into the Japanese market. "I think it's kind of silly,"

said Michael Wallace, an analyst at UBS Warburg. "(The) XBox will have

almost no impact on anybody's numbers this year."

Wallace added that if Microsoft does delay the Japanese launch, it could

actually help video game publishers in the US, because it would likely mean more

available units here.

(C) Reuters Limited 2001.