Jim Cramer Knocks Video Games... Here is my thoughts
Tonight on Mad Money Jim was asked about EA (ERTS)during the lightning round. He called EA "best of breed" and said that the industry was too expensive (ie. p/e is too high, not $$) and gave his sentiment of "dont buy" for EA and extended it to Activision.
Here are my thoughts regarding Activision:
1. I like Jim Cramer and find his show informative and entertaining. I know from reading his books that for the lightning round he will steer people to particular industries and best of breed stocks.
I also disagree with him that EA is the industry leader... Activision is and here is why
Why I like ATVI during earnings season: 1. Board approved 1 billion dollar stock buyback 2. Clean balance sheet with very little debt and over $2 in cash per share 3. 3 biggest titles are being released during Q4 4. Gamestop reports better than expected earnings in Q4 and cites Activision games as 3 of its 5 best selling games 5. Synergies during the acquisition of Vivendi have not been reflected in the Q3 earnings figures and management has raised the amount of synergies that will be realized. 6. Activision is still making MMA unlike others in the industry.
1. Gamestop represents 10 - 15% of Activisions total business. 2. Wallstreet cares about growth and Activision's pipeline is the best in the business with megahits like Starcraft and Diablo set of late 2009. Beyond 2009 look for the expansion sets of both games and up to 3 total expansions for Starcraft... not to mention updates from likes of call of duty, Warcraft, and guitar hero (despite the fact I think this franchise is dying).
Again, I want to hear what others have to say! Are you like Jim or are you like me?!