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Electronic Arts Inc. (ERTS) Message Board

  • dales53 dales53 Aug 5, 2011 9:57 PM Flag

    And how will the new AA+ S&P rating effect EA and/or the market?

    Just saw the news flash that S&P has downgraded the US credit rating to AA+. Thoughts and comments on how this may/will effect the overall market and EA in the near and further future are welcome. Interesting topic for discussion. dales53

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    • ERTS isn't LOSING money you guys

      you have to look at Ebitda or Free Cash Flow generation

      quit look at GAAP/Non-GAAP nonsense and EPS numbers that's all accounting voodoo

      ERTS has a title launch cycle that's on-par with ATVI over the next 6-9 months

      they sunk all those costs over last 24 months to prepare for their launch cycle

      they're intently focused on cutting costs and making the most of digital (higher margins)

      listen I know the stock took it on the chin last 10-days

      but it's encouraging to see this lead the S&P today on an up-day (upgrade or not)

      this stock is under-owned by mid cap managers, and retail guys also ignoring this.

      if there is ever a buyout (40-50% probability) this will fetch 10-12x Ebitda FY2013

      that could be anywhere from $34-$42 depending on if competing bids emerge

    • thats the key...you "think" its worth 38-42.

      at $38 a share that puts it ahead of ATVIs market cap, with 1Billion less revenue and still losing money.

      If i was to pick out of the two...i'll go with the one with 4bil in cash, 1B more revenue, and is profitable.

      Oh not to mention a history of proven success vs failures. Well you do have Madden..and Sim city.

    • they are adding huh? thats why the price decline from 25 to 21 prior to the downgrade. THEY ARE SO ACCUMULATING...ALL THE WAY DOWN.

    • to say the least all the hard work the stock has put in from early Feb at $15 to $25 has just been punched in the gut by this sovereign credit debacle. frankly I think ERTS fundamentals have only been getting better last 2-3 months. this company is on track to do $850m in Ebitda next fiscal year which puts this thing close to 5.0x EV/Ebitda - a complete total steal of a valuation given structural catalysts over next 12-14 months.

      • 1 Reply to overrated_author
      • ALL fundamentals went out the window during the "Great Recession" of 2008. SanDisk trading at $9, back to its normal $45 range a couple weeks ago. The world went nuts and peaked March 9 2009.

        During historical moments like the US losing its AAA rating and gold jumping to $1700 an ounce and the ^VIX at 39 and you are still pumping an equity based on its fundamentals?!!!! Are you crazy? Wouldn't you want to be all cash during times like these? I think 99.9% of the investment community would be. It is the big crash all over again and you want to be IN the market?

    • Could see major market crash on Monday morning. Question is how quickly will bargain hunters enter the picture?

 
EA
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