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Electronic Arts Inc. (ERTS) Message Board

  • blamokie blamokie Jul 11, 2005 10:03 AM Flag

    ERTS will meet estimates for this

    quarter but most likely they need to lower full year guildance so I don't know what you call that.

    The earnings ramp into year end is very steep and they barely lowered them when they announced the 29 cent miss for Q2.

    Film, DVD, and Gaming software are all slowing for some reason.

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    • king, Re:

      <<After making your 2 points which side of the fence would you pick if the recession card ever came into play? >>

      My two point would determine what I would do if a recession hit. The event itself would not faze me much - if it drops the stock price, I'd consider it a buying opp, as I don't think it will have much material effect on earnings. The questions would be: How well is ERTS executing, and how much competition (and the quality of that competition) is it facing? Right now, I still think ATVI is the best bet, and best value in the sector. If ERTS drops, rather than continues to rise, I'd like to get in. But that doesn't mean that ERTS couldn't climb to 80 - that's just part of the historic unpredictability of the sharp movements in this stock, and gets us back to my orinal point that ewan chooses to ignore at his own peril: Predicting ERTS short-term is a fool's game.

      Jamok

    • OK - I see your point but I don't think EA would be able to sustain the same growth levels if a recession were to hit. As a result, I feel the pps would take a hit. They are currently facing serious competition from other vendors and they would need to make acquisition(s) or develop/license blockbuster titles to continue sales expansion. After making your 2 points which side of the fence would you pick if the recession card ever came into play?

    • thank you for once again validating what i was saying earlier about the recession connection to the vg industry...i really didn't pull that stuff out of my ass...i've just been around long enough to notice

    • rE:<<I don't think ERTS could sustain the same kind of growth it had in previous years, especially in a recession.>>

      I think this line of reasoning was proved wrong - in the last recession, which included the tremendous bursting of the tech bubble in which a lot of tech stocks (EMC, AMD, etc.) lost huge amounts of valuation (like 90% and more), ERTS treaded water, and then nearly doubled once the economy stabilized. Naysayers said that game buying would be the first discretionary item to go - in fact, people bought more games, as it was both a cheap form of entertainment (taking 2-4 kids to the movies w/popcorn and sodas cost about the same as a game, and only lasted 2 hours), much as movies thrived during the great depression. Ironically, ERTS and the vg sector are relative 'safety plays' in hard econmic times, the way the drug stocks used to be. They're just a different form of drugs, and everybody's gotta have their drugs ;-) The challenges ERTS faces now, in terms of growth are these: It's obviously hard to grow substantially percentage wise when you're this big, although the whole vg pie can still get a lot bigger, as there are lots of non-gamers still out their, most notably the female demographic. The other two factors are the increased competition from other vg companies who now rival (or beat, in the case of Ubisoft, IMO) the game quality ERTS was known for, as well as the factor that ERTS has clearly stumbled, from poor catalog sales to some poor products (Jesus, who let Catwoman out the door rather than euthanizing that piece of crap?). ERTS has backloaded the year tremendously - if they deliver, it's back to the heydays. If not, It's tarnished rep will be more scrutinized by the street going forward.

      Jamok

    • "Film, DVD, and Gaming software are all slowing for some reason."

      Oil is taking a toll. It is working it's way into corporate earnings (see FedEx as an example). For the average consumer the gasoline price increase over the past couple of years is taking a toll on consumer spending patterns. Disposable income has diminished. For gaming, couple that with the console transition period and you've got a double whammy. Add in the rising interest rates on short term loans (credit cards) and you can see the impact it may be having, too. Triple whammy?

      • 1 Reply to kingkongzilla
      • "..Disposable income has diminished. For gaming, couple that with the console transition period and you've got a double whammy. Add in the rising interest rates on short term loans (credit cards) and you can see the impact it may be having, too. Triple whammy?"

        ..now i realize you said you just started trading this one, but traditionally, if there IS a recession, or the economy slows, people are more inclined to purchase a $50 video game that can occupy for hours, rather than $10 to go to see one movie for entertainment purposes...EA does very well in this sort of climate, not to say other factors don't come into play.........

    • "Film, DVD, and Gaming software are all slowing for some reason."


      People are trying to save pennies here and there.

      These are not signs of strong economy or stong "consumer conficence" numbers we heard or read about in recent weeks.

      "They" lie, you know.

 
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