Shares in many video game publishers opened sharply lower on Monday in the wake of the news late Friday that the U.S. Securities and Exchange Commission has opened an investigation into industry accounting practices.
Three publishers thus far -- Acclaim Entertainment Inc AKLM.O , Activision Inc. ATVI.O and THQ Inc. THQI.O have acknowledged receiving letters from the commission requesting information.
All three have said they are cooperating fully, and Activision and THQ said they had been told by the commission not to take the requests for information as any indication that laws had been broken.
THQ shares were off nearly 10 percent at $15.93 after the open, while Activision shares were down 9.3 percent at $11.30. Both stocks were among the top percentage losers. Acclaim shares were off 7.4 percent at 63 cents. All three stocks trade on Nasdaq.
Also trading lower was Take-Two Interactive Software Inc TTWO.O , down 5.3 percent at $26.20, also on Nasdaq. Take-Two is already under its own formal SEC investigation related to its accounting practices.
"We expect there to be uncertainty surrounding the stocks following this announcement," Harris Nesbitt Gerard analyst Edward Williams said in a note Monday. "In our view, the key issue for investors will continue to be to focus on the companies with the strong brand portfolios whose products continue to perform well at retail."
News source: Reuters