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Electronic Arts Inc. (ERTS) Message Board

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  • Rab_Nesbitt Rab_Nesbitt Oct 4, 2001 2:04 PM Flag

    ERTS First Call estimates

    Two reasons. The first is general to the whole industry which is that this is a transition year. The time when sales on the previous console generation go down and margins drop as prices have to come down, while hardware sales of the next generation consoles aren't yet high enough to match previous years earnings. Next year there will be a more mature PS2 market, as well as GameCube and XBox fighting for second place. Sony expects to have 20,000,000 PS2's worldwide by the end of their fiscal year (March), but PS1 has already sold at least 75,000,000. The second reason is EA specific, which is the $40,000,000 they're throwing down the drain every quarter in net losses for keeping EA.COM alive. People are optimistic it will eventually break even, but with one of their flagship titles (Majestic) failing and becoming CD-only, and another being canned recently (SimsVille) I don't think that's likely. IMO next years estimates are too high and haven't factored in the increased competition particularly from Sega.

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    • > People are optimistic it will eventually break even, but with one of their flagship titles (Majestic)
      > failing and becoming CD-only, and another being canned recently (SimsVille) I don't think that's likely.

      Majestic isn't CD-only, they are offering a CD version in addition to downloading it over the internet.

    • Rab:

      Thank you. Your analysis was exactly what I was looking for and a big help. I happen to agree with you. Based on ERTS past history and the strength of the gaming sector fundamentals, I am bullish on ERTS long-term. However, I think there is still too much risk to warrant purchasing this stock above $40.

      • 1 Reply to bigmammafrancis
      • >I happen to agree with you. Based on ERTS past history and the strength of the gaming sector fundamentals, I am bullish on
        >ERTS long-term. However, I think there is still too much risk to warrant purchasing this stock above $40.

        That is a pretty widely held opinion among people on this board. I certainly agree with it and I'd add that when it was up in the high 50s and 60s, it was an obvious short. Right now I'm on the sidelines with respect to ERTS . . . if climbs way again, I'm gonna short. I haven't decide where by buy entry point is though.

 
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