The Zacks Analyst Blog Highlights: Electronic Arts, Facebook, Zynga, Arris Group and Google

Zacks

For Immediate Release

Chicago, IL – September 4, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Electronic Arts Inc. (EA), Facebook (FB), Zynga (ZNGA), Arris Group Inc. (ARRS) and Google Inc. (GOOG).

 

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Here are highlights from Friday’s Analyst Blog:

 

EA to Launch JetSet Secrets on Facebook

 

Video game developer and publisher, Electronic Arts Inc. (EA) recently announced a new game called JetSet Secrets for the Facebook (FB) platform. The new title promises adventure as gamers play the role of detectives, who travel worldwide to uncover secret plots as well as to search for hidden objects.

 

In their journey to solve the mysteries, gamers will be able to take the help of their friends. Moreover, gamers can also help their friends to solve their own mysteries, which will earn them social points, much similar to EA’s popular Facebook game SimCity Social. The co-operative feature will further boost the game’s attractiveness in our view.

 

Over the last couple of years, EA has taken several initiatives to gain traction in the popular segment of social gaming through various games such as The SimCity Social, The Sims Social, Monopoly Millionaires, FIFA Superstars and Scrabble. JetSet Secrets is the latest offering from EA in this space.

 

According to market research firm eMarketer, there will be approximately 76.5 million social gamers in the U.S. by the end of 2012, of which 48.0% will be social network users. Social networks such as Facebook have become the major destination for social gamers as well as game developers.

 

Social game makers such as Zynga (ZNGA), Rovio and Mensing have successfully utilized the Facebook platform to garner significant customer base and revenue over the last couple of years. However, among all these developers, Zynga has been the most successful to date. As of June 30, 2012, Zynga had developed seven of the top ten games on Facebook, based on daily active users (DAUs).

 

JetSet Secrets is EA’s first hidden object game, a genre in which Zynga’s Hidden Chronicles holds the leading position. EA believes that the new game will be able to boost its customer base further and provide significant competition to Zynga going forward.

 

Our Take

 

We believe that EA is diversifying its revenue generating base. With rising consumer spending on digital gaming (social, mobile, casual), we remain optimistic on EA’s growth trends over the long term. The company is opening up new fronts in social, mobile and online gaming based on its well known franchises, which is expected to boost its customer base going forward.

 

We believe that EA’s innovative product pipeline will boost its market share in the online gaming market. Moreover, EA’s strong focus on the digital segment will help it stand out even amid sluggish market conditions going forward.

 

However, the highly fragmented video game market continues to witness increased competitive pressures, which are hurting its overall profitability. This compels us to remain Neutral on the stock over the long term.

 

Currently, EA has a Zacks #3 Rank, which implies a Hold rating in the near term.

 

 

Arris to Bring Advanced Products

 

Arris Group Inc. (ARRS) plans to present its end-to-end video, data and voice solutions to the IBC Exhibition and Conference, between September 7 to 11 in Amsterdam, Netherlands.

 

In the exhibition, ARRIS will exhibit smooth functioning of content delivery by supplying service providers with improved capacity and a seamless migration path between legacy service delivery and next-generation IP networks.

 

During the exhibition, ARRIS intends to give demonstration on innovative products like ARRIS VIPr, an advanced video processing platform, a next generation video transcoder generating video streams in multiple bit rates, multiple formats and multiple resolutions in order to support multi-screen, high quality HD/SD video delivery.

 

The ARRIS Whole Home Solution, which is a centralized triple-play gateway solution comprising a media gateway, players, Moxi® user interface and cloud services portal, escorts the personalization and management of home entertainment and media to an entirely new level.

 

A few days back, ARRIS posted solid financial results for the second quarter of 2012, handily beating the Zacks Consensus Estimates. Arris Group benefited as several cable MSOs upgraded their customer premises equipments (CPEs) with high-speed DOCSIS 3.0.

Arris completed the acquisition of BigBand Networks Inc. We believe the acquisition of BigBand is a major step by Arris to convert itself as an all IP-converged network architecture solution provider.

 

However, we believe the market for broadband infrastructure offerings is highly competitive and is prolifically supplied by large companies, including Google Inc. (GOOG) controlled Motorola Mobility and LM Ericsson.

 

These competitors have broader product portfolios targeting diversified markets of cable TV, telecom, and satellite communications. Diversification into digital video market may not generate expected results since all these bigger rivals already have strong footings in the business.

 

Moreover, higher startup cost of the newly launched products coupled with limited customer base will continue to act headwind for the company going forward. We, thus maintain our long-term Neutral recommendation on ARRIS.

 

Currently, ARRIS has a short-term Zacks #3 Rank (Hold) on the stock.

 

 

 

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