Prudential Cuts Barnes & Noble Estimates

Analyst Mark Rowen says he's disappointed by holiday sales warnings from the bookseller and its video game unit

Prudential cut its estimates on Barnes & Noble (BKS ).

The bookseller says if current trends continue, it expects lower fourth quarter earnings per share on flat to down 3% same-store sales. Analyst Mark Rowen says management cited a shorter holiday season, a weak economy, and tough comparisons for the shortfall.

Rowen says he was diasppointed by the results, as he had expected strong gaming software sales at GameStop (Barnes & Noble's 63%-owned unit) in the holiday period, due to the release of four new gaming platforms in the last two years. But instead, GameStop warned of lower-than-expected sales for the fourth quarter.

He notes Barnes & Nobles consolidates GameStop's financial results, and records a minority interest to reflect the portion of GameStop it doesn't own. He cut the $1.77 fiscal 2003 (Jan.) earnings per share estimate to $1.70; he also is keeping the $2.23 fiscal 2004 estimate until additional clarity is provided. Rowen will keep his buy rating and $40 target.

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