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By Adam Satariano and James Callan Jan. 7 (Bloomberg) — GameStop Corp. , the world’s largest video-game retailer, declined the most in seven years after fourth-quarter earnings fell short of estimates because of disappointing holiday sales. GameStop fell $3.37, or 14 percent, to $20.66 at 2:39 p.m. in New York Stock Exchange composite trading, after dropping as much as 19 percent, the biggest intraday decline since Dec. 19, 2002. The stock gained 1.3 percent last year. Promotional offers from rival retailers, including a $50 discount on Nintendo Co.’s top-selling Wii console from Wal-Mart Stores Inc. , caused the game seller to lose customers, said Arvind Bhatia , an analyst with Sterne Agee & Leach Inc. based in Dallas. Comparable-store sales fell 8.6 percent during the nine- week holiday period ended Jan. 2, Gamestop said. “Walmart and other retailers were much more aggressive this holiday season than they were in the past,” said Bhatia, who recommends buying GameStop shares. He estimated Walmart, the world’s largest retailer, lost $30 on each Wii sale as a result of the promotion, an offer GameStop didn’t match. Melissa O’Brien , a Walmart spokeswoman in Bentonville, Arkansas, didn’t immediately reply to an e-mail seeking comment. GameStop’s profit probably dropped to $1.25 to $1.29 a share in the quarter ended Jan. 2, the Grapevine, Texas-based retailer said today in a statement. The company forecast earnings of $1.47 to $1.65 a share in November. Analysts projected $1.58, the average of 18 estimates in a survey. Shortages of Products The company expects full-year earnings of $2.23 to $2.27 a share, down from a November forecast of $2.45 to $2.63. Analysts projected $2.56 on average. Chief Executive Officer Daniel DeMatteo said the company has almost $700 million in cash and is considering a stock buyback or dividend. “We’re looking at giving some back to shareholders in some fashion,” DeMatteo said today in an interview. The decision requires approval from the company’s board of directors and he hopes to make an announcement “sooner than later.” GameStop said holiday sales were impacted by “economic weakness,” winter storms at peak shopping periods in December, and unexpected shortages of products such as New Super Mario Bros. Wii and the PlayStation 3. International sales were especially weak, DeMatteo said. “The macroeconomic environment put a damper on people buying as many video-games as we expected,” DeMatteo said. ‘Out of Stock’ Excluding purchases of about 10 top-selling games, sales were disappointing, DeMatteo said. Nintendo and Sony couldn’t keep up with demand for consoles, he said. “They were out of stock right before Christmas,” DeMatteo said of Sony’s PS3. Sony said yesterday that holiday sales of the PlayStation 3 rose 76 percent, exceeding 3.8 million units worldwide in the five weeks leading to the end of the year. Nintendo said this week that U.S. sales of the Wii climbed 40 percent to 3.1 million units. In the holiday period, hardware revenue at GameStop dropped 8 percent partly because of console price cuts on Sony Corp.’s PlayStation 3, Microsoft Corp.’s Xbox 360 and Nintendo’s Wii. New video-game software sales rose 4 percent in the holiday period, spurred by demand for Activision Blizzard Inc.’s “Call of Duty: Modern Warfare 2” and Ubisoft Entertainment SA’s “Assassin’s Creed II,” according to the statement. To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net ;