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Electronic Arts Inc. (ERTS) Message Board

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  • raphael8 raphael8 Jun 16, 2006 2:52 PM Flag

    Backdated Stock Options

    It isn't nearly as complicated as you make it sound.

    Everyone knew that a hardware transition was underway. Most people in the industry (because they have a self-interest in saying so) initially insisted that this transition would be smooth. They were wrong about this. As I've said many, many times, Sony's failure to be first to market left open the possibility that they would not win the battle this time. That means EA faces greater possibility of failure in predicting where the development resources should be applied. That created uncertainty for Wall Street. The market hates uncertainty.

    Given the above, you could easily predict that the stock would correct. In a time of uncertainty, the price moves down to the 50 month simple moving average (at a minimum). Check a 20 year chart.

    And, yes, I posted this on this board long before it actually happened. So, don't try to tell me you can't predict a correction. We didn't need a melt down of the market, or a hurricane to create a loss of value in a single troubled stock.

    Now we'll try to pick the bottom, or something reasonably close without riding it down more than 10%. I don't believe in buying blindly in fear of missing a 15% move. That too easily results in dead money. I can earn 5% virtually risk free while I wait.

    Best of luck.

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