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Gaming earnings: EA forecast misses expectations

Yahoo Finance Live's Julie Hyman and Brian Sozzi break down the earnings report from American video game company Electronic Arts (EA).

Video Transcript

JULIE HYMAN: Shares of Electronic Arts EA are higher this morning. What's interesting, the company's forecast for revenue and earnings in this current quarter, were below what analysts had been predicting. The company's Apex Legends franchise has been doing well but Battlefield not. Was a big flop. So I have to admit, Soz, I'm a little surprised to see the stock recover here.

BRIAN SOZZI: Surprised but maybe not so surprised, just given the action, this deal activity we have seen in the gaming space. Of course, Microsoft coming out here, Activision Blizzard. There's a lot of other deals. You have Take-Two for Zynga. A lot of things going on in this space, perhaps to keep a bid under shares of Electronic Arts, after a disappointing quarter.

Just look. Their bookings grew 7% year over year. The Street was looking for about 10%. The company also guided down for the fourth quarter here. Battlefield 2042. a game I've never played before but of course, the Street is tracking it. That looks to be some delays there. Disappointing performance with that as well.

But the big thing, the big question here Julie, is where is the buyout for Electronic Arts? The stock is up 25% over the past two years. The S&P 500 are up about 45%. The NASDAQ up over 50%. If you're the team at Electronic Arts, what are you doing here?

And secondarily, how is that stock underperforming considering the installed user base of these consoles? They have a hit on their hands. Of course, a longtime hit in Madden Football, all this deal activity. At what point does Electronic Arts step up here and get some form of deal done?

JULIE HYMAN: I don't have the answer to that, Soz.

BRIAN SOZZI: Neither do I. And I'm not sure they do either, Julie.

JULIE HYMAN: One more thing I just wanted to mention is that Sony is again cutting its forecast for how many PlayStations, PlayStation 5 specifically, it can ship because it's not getting enough chips to power those consoles. The company said that it shipped 3.3 million units but the total is 17.3 million. But that's below where the PS4 was at this point, same point in the cycle. So we're going to keep watching that as well.