"Our 2004 holiday selling season benefited from strong software sales, led by Microsoft's Halo 2 and Take Two's Grand Theft Auto San Andreas, and the successful launch of the Nintendo DS platform," says Jeffrey Griffiths, president and CEO of EB. "However, as the quarter progressed, the industry-wide hardware shortage became more significant than we initially anticipated."

In fact, according to published reports in November, preorders for the new Nintendo DS system, which is distinctive in the gaming world for its dual screen (hence DS), totaled about 2 million units. Nintendo had initially planned for initial production of about half that number, and demand was so strong for the new device that the game maker was obliged to temporarily stop taking orders for it over the Internet the same day that ordering started, Nov. 3.

According to EB, the industry-wide hardware shortage affected not only the company's top line, but also its margins due to lost sales of higher-margin software and accessories that typically accompany a hardware purchase. As such, based on early trends in January, the company now expects earnings per share to be at the lower end of its previously announced ranges of $1.62 to $1.72 for the fourth fiscal quarter and $2.20 to $2.30 for the full fiscal year. EB will announce fourth quarter and year-end results for fiscal 2005 in mid-March.