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Electronic Arts Inc. (ERTS) Message Board

  • ttworocks ttworocks May 4, 2011 9:17 PM Flag

    The key points

    Strategically, the main points were delivered by JR in the begining of the call. Now I know the shrts/bashers will find fault at anything this management says, but to me this makes perfect sense. For those interested here it is:

    "we are announcing a big shift to “offense”. Over the coming years, we will transform EA from a packaged goods company to a fully integrated digital entertainment company. We transform EA to a games-as-a-service (GAAS) model by focusing on three new strategies:

    1. Intellectual Property – we believe we are driving the strongest portfolio of IP in the industry with EA SPORTS, FIFA, Hasbro, Madden, Pogo, Battlefield, Need For Speed, The Sims,
    Tetris, Dragon Age, Mass Effect – and more. We fully intend to make these properties into
    year-round businesses that lead their sectors across a range of platforms.

    2. Platform – Increasingly, we see ourselves as a software platform every bit as much as we
    see ourselves as a content maker for other companies’ platforms. We have a great start
    with 112 million consumers in our Nucleus registration system, up from 61 million a year
    ago. And, while we will continue to be a great partner to our best retail customers and firstparty partners, you will see the beginnings of a consumer game platform emerge at EA that complements and extends the console ecosystem and addresses the wider opportunity on
    other devices.

    3. Talent – To deliver on the two strategies above – IP and Platform – we will expand on a
    model that is already working at EA – and only at EA. We are the only company with
    world-class teams working cross-platform on social, mobile and console development. We
    are integrating these teams and augmenting them with product monetization and
    marketing. It’s a big change. As an investor, you can see this as a way to better manage
    our IP, and drive up the ARPU for our core properties. As a developer, you can see this as
    the reason EA will be the most interesting and satisfying place to work in the game
    industry."

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    • >>Hopefully you are just raising hackles.<<

      Nope. I can smell a steaming pile of "irrational exhuberance" a mile off. A little wager-via-trade will add just a bit of spice to the banter.

      I'm betting my next trip to Cabo will be courtesy of some history lessons that will settle in over the coming weeks. I'll look at rolling out under 20 or so.

    • Austin. Seriously, you have to take a step back here and have a look. There are a lot of crappy companies out there that you can short. I was thinking that you were a short troll or just a troll but it seems like you are actually taking yourself seriously. Don't lose your money here. Some poor rolls in the macro economic climate could easily take this company into the $19's in the short term but betting heavily against this company is the wrong move. Hopefully you are just raising hackles.

    • >>You are also betting against more than half a billion dollars of ERTS buying back its own stock.<<

      Not to worry. I'll happily stack my industry expertise against any of these contestants. I'm also betting against Junior and crew's ability to do something they've never come close to succeeding at: An MMO launch.

    • Fantastic. At least we know where your short it.

      Be aware that you are betting agasinst very powerful trends, with real business models behind them. You are also betting against some very knowledgable and deep-pocketed investors (you are aware of the fact that BlackRock has gobbled up 6% of ERTS outstanding shares in the $18s). You are also betting against more than half a billion dollars of ERTS buying back its own stock.

      Good luck to you. You will need it.

    • >>Keep up with your myopic focus on SWTOR and your rather improbable bet that it is going to implode.<<

      I'd hardly say carefully scrutinizing a $300mm+ project is hardly "myopic." That would be the gorilla in the room that people refuse to talk about.

      Every publisher is doing mobile/social/digital/cloud/"insert trendy buzzword of the week." Those are just the usual headfakes and sucker plays this industry and the MMs love to use to bilk the retail investor. History, folks--History. There's no differentiating issue, there. (Anyone remember virtual reality? How about the windfall in-game advertising was going to generate? All those piles of money everyone was going to make during the great MMO rush of 5-8 years ago?)

      My short limit order stands at 4000@21.50. I need somebody to get just a bit more excited about trendy buzzwords and buy into the hype spike...

    • Keep up with your myopic focus on SWTOR and your rather improbable bet that it is going to implode.

      What is really moving this stock is the rapid growth in digital sales. Even w/o SWTOR (assuming for a second that it will "fail"), this company is growing like crazy in mobile/social/DLC. Wall street likes that as these are very high-margin profits. This is a very sclable, low-risk, high-margin, viral business model. And it seems that it is working. And it seems that ERTS has a true competitive advantage against the Zynga's of the world with the strategy they outlined. What's not to like?

      You really need to do some homework.

    • >>You said that you are getting short at $21. Did you?<<

      Lining it up as we speak. Talk about a tailor-made opportunity. :)

    • Ironic...JR & GAAS. I like ERTS here, but sometimes JR & his team need to stay quiet or watch their wording.

    • and...

      "I’d like to outline our fiscal ’12 guidance at a high level. There are three factors that make fiscal ’12 particularly challenging for EA:

      1. Following a record year for revenue and profitability, our EA SPORTS business is facing
      two potential league lockouts and will be comparing to an fiscal ’11 that included a FIFA
      World Cup title. Year over year these differences represent roughly a $250 million revenue
      challenge.

      2. With Battlefield 3 we are mounting the biggest launch campaign for a game in EA’s history. We think the franchise is worth it. We know the opportunity is worth it. Still, this is a big commitment of resources.

      3. We are preparing the launch of Star Wars: The Old Republic. The launch date, while in
      our fiscal year, is not yet certain. We see roughly $0.15 EPS variability between the
      potential launch windows.

      Despite these investments and uncertainties, we are guiding to a non-GAAP EPS range with
      the midpoint up 14%, and are confident we will finish the fiscal year with an EPS run rate up 50% versus fiscal ’11.

 
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