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Electronic Arts Inc. (ERTS) Message Board

  • nsthil nsthil Nov 28, 2000 10:32 AM Flag

    EDIOS had huge writeoff

    but dont worry any such action is already
    factored in to ERTSs share price. Notice how they are
    downplaying their exposure to PS2 for the Christmas season.
    Maybe ERTS may want to write off some of their net
    investment also. TTWO and EIDSY have both jumped that
    ship.

    Dont worry guys ERTSs WCW games are selling like
    hotcakes. Should just do bad enough to offset any profits
    from at least a couple of their PS2 titles.

    Top
    Financial News


    11/28 05:22
    Eidos 2nd-Qtr
    Loss Widens on Charge for Unsold Games (Update2)
    By
    Christine Harper


    London, Nov. 28 (Bloomberg) --
    Eidos Plc, the U.K.'s largest video-games maker, said
    fiscal second-quarter loss widened as Sony Corp. delayed
    the introduction of its PlayStation 2 console and the
    company wrote off the value of unsold games and an
    Internet investment. Its shares fell as much as 11
    percent.

    The net loss at the creator of game
    heroine Lara Croft widened to 60.2 million pounds ($89.1
    million), or 58.1 pence a share, in the three months ended
    Sept. 30 from 12.8 million pounds, or 13.3 pence, in
    the same period last year. Sales fell 25 percent to
    20.6 million pounds.

    The company's sales,
    along with rivals such as Electronic Arts Inc., have
    fallen as customers waited for the new PlayStation.
    Eidos has cut costs and lowered production after some
    of the games produced last year weren't sold,
    forcing the company to write them off as a loss.


    ``Obviously the big problem with the results, the worry, is
    the exceptional item that they've taken,'' said
    Julian Morse, an analyst at Beeson Gregory who rates the
    shares ``buy.'' ``Apart from that I think it's actually
    quite a good statement.''

    Eidos shares, which
    had already fallen 82 percent this year, dropped as
    much as 22 pence to 177p.

    One-Time Charges


    During the quarter, the company wrote off 16.9 million
    pounds of unsold games. It also wrote off its 12.6
    percent stake in Internet site Express.com, which it
    bought last year for $55 million. The company spent
    another 900,000 pounds in fees related to unsuccessful
    talks to be acquired earlier this year.


    Excluding these charges, the company said its net loss
    narrowed to 6.1 million pounds from 16.8 million.


    ``Our fortunes as a third-party publisher will be based
    around the success of the PlayStation 2,'' said
    McGarvey, who replaced Charles Cornwall this month. Sony
    ``expects to be back on track in the first calendar quarter
    of next year.''

    Still, analysts have warned
    that shipments of PlayStation 2 are lagging
    expectations because of problems making graphic chips. The
    console was introduced last month in the U.S. and this
    month in Europe. In the U.K., the entire 165,000-unit
    pre-Christmas allocation of consoles was sold out in advance.


    Growth to Come

    Morse of Beeson Gregory said he
    expects sales of video games to grow again next year once
    more PlayStation 2 consoles become available and
    Microsoft Corp. and Nintendo Co. introduce competing
    products.

    ``There's no doubt about it that the
    market next year is going to be huge and in the next
    three years there's going to be massive growth,'' Morse
    said.

    McGarvey said the company has limited its
    exposure to PlayStation 2 during the holiday period and
    instead will mostly sell games for the original
    PlayStation, personal computers, and other consoles such as
    Sega Corp.'s Dreamcast.

    ``There are a number
    of negatives and a number of positives'' in the
    results, said Kean Marden, an analyst at UBS Warburg who
    rates the shares ``hold.'' ``On an underlying basis the
    numbers look a touch better than I was expecting, but
    you've also got exceptionals which are extremely large
    and no doubt that will scare a number of private
    investors when they read it.''

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    • I am already out of it spotears. I sense our
      "discussions" have become much more amicable even though our
      opinions differ. Hopes things work out well in the long
      term.

      I have to hope for that because I have
      long positions in this industry also.

    • Yeah, ERTS screwed the pooch when they got the
      WCW liscence. I'm also looking to go short on ERTS
      but still waiting to dump my shares before I do so. I
      missed that nice opportunity we had yesterday, so
      hopefully we'll see another NAS pop so I can get out at
      around 45-48. I might get back in once ERTS products for
      all next-gen systems start being unveiled.

    • nsthil, you almost make it sound like you saw
      this PS2 shortage coming!

      PS2 sales are not
      going to make or break EA's quarter. Stock price is
      down because NASDAQ is down, nothing more to
      it.

      PS1, N64, PC sales all looking great. EA.com is
      looking strong, IPO should be coming soon.

      I'm
      still long and waiting for the market to recover!

      • 3 Replies to ertsinvestor
      • nsthil, you almost make it sound like you saw
        this PS2 shortage coming!

        Maybe not, but with
        new product launches you frequently have problems
        with delays and shortages. My opinion was based on
        fact that ERTS shares were priced for perfection.
        Regardless after the shortage was first announced I as well
        as others mentioned that SONY will apparently come
        up short with Europe launch as well as probably end
        up with problems meetin the schedule they have layed
        out but ERTSs stock price recovered back to above $50
        while insiders continued to sell. That was a gift to
        the longs here and also for the shorts.

        PC,
        N64 and PS1 sales for ERTS will be way off from last
        year. C&C for and other titles for PC will fall far
        short trying to make up for SIMS from last year. Sports
        titles for PC for this year will be very weak sellers.
        Not being stressed much by ERTS this year and there
        is enough of the older games there at cheaper price
        points. WCW for PS1 and N64 will bomb. They have no DC
        games and weak showing in Gameboy.

        ERTS will lay
        a big fat rotten egg sometime in the next few
        months.

 
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