Thursday, January 22, 2009
Electronic Arts Needs to Get Back in the Game
Tough times continue for Electronic Arts. Etan Horowitz of the Orlando Sentinel reported layoffs at the Maitland (Orlando) office.
Even with popular franchises in the sports division, such as Madden NFL, and the action/shooter category, such Medal of Honor, EA sank from 47.82 to 16.53 in the past six months. (NASDAQ: ERTS)
The reason EA should be very concerned is because they're an outlier in the video game industry as a whole. Only a few weeks ago, Anita Frazier of NPD Group told the Wall Street Journal that the video game industry was setting a blistering pace. EA is still waiting to see the positive results from that momentum.
Jim Cramer, host of Mad Money on CNBC, offered this assessment of EA.
ERTS is a very, very tough situation, because they're best of breed, and at Cramerica we like best of breeds. However, that business has slowed, they haven't been able to develop new titles, we haven't had the take over activity that I expected. So my take is EA is not cheap and can't be bought, but I'll make the same case for Activision and for Gamestop. I do believe if there was more of an M and A market, that company would be acquired.
I grew up playing EA's games, and I witnessed the remarkable growth of Madden's popularity first-hand, so I'm just amazed by EA's recent struggles. A company once set full steam ahead has come to an abrupt halt. EA will have to do the same thing many of us were forced to do when the score got out of hand on Madden, hit restart and come up with a new game plan.
By Matt O'Hern at 01:28 PM | Comments (0)