EA stock takes a beating

Publisher's disappointing guidance revision sparks sell-off of stock and analyst downgrade; shares lose 12 percent of value in a single day.

Yesterday, Electronic Arts gave analysts a heads up that some disappointing financial reports are on the way. After the close of trading, the publisher withdrew its previously issued financial guidance for the fiscal year ending 2009, saying that its net revenue and earnings-per-share expectations would not be met.

Shareholders reacted to the news today by selling off EA stock at nearly six times the daily average. EA shares opened the day trading at $16.85, down nearly 13 percent from the previous close of $19.35. Over the course of the trading day, they recovered slightly to close at $17 even, still down more than 12 percent for the day.

They weren't the only ones backing off the publisher's stock. Wedbush Morgan Securities analyst Michael Pachter downgraded his rating of EA shares to "Buy" from "Strong Buy." Despite the move and an investors note taking EA management to task, Pachter is still mildly optimistic about the publisher.

"The company remains the largest third party packaged goods publisher, has a large number of successful franchises, and has tremendous brand loyalty," Pachter wrote. "Should management execute on the renewed promise to get things right, we have no doubt that the company can grow earnings at a rapid rate. Thus, as much as we may feel it appropriate to give up completely on the stock following yet another misstep, we think it would be inopportune to do so."

Pacific Crest Securities' Evan Wilson showed less patience with the publisher in his own note to investors.

"EA admitted that its games did not sell well, but it did not take responsibility and address the core problem that it has not produced hit games," Wilson said, adding, "EA is positioning itself as a victim of its circumstances--that the best is yet to come after it makes it through these difficult times. However, we continue to believe that its actions exacerbate the negatives that the videogame industry as a whole is facing. Results have been mediocre for too long."

The lowered projections are just the latest in a series of hits EA has taken this year. In October, the publisher announced a greater-than-expected $310 million loss, or 97 cents per share, for its fiscal second quarter. That loss came despite net revenues spiking 40 percent to $894 million during the July-September reporting period. At that time, EA also revealed that it would be cutting 6 percent of its workforce--or roughly 600 jobs--across a variety of divisions within the company. Yesterday's news included word that EA would be laying off still more employees, consolidating facilities, and cutting back on its slate of games for the next year.

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187 comments
codename-60091
codename-60091

hey idiots go meow urself!! buying a rubbish games from EA bad made me broke enough both physically and mentally!!! promote smoking in games.(NFS) where are u god da..mn ethics?

s0ck69
s0ck69

jesus there is a complete lack of intelligence on this topic.This story is about people losing there jobs! It has apsolutely nothing to do with poor quality games and drm.Maybe you should watch the news,maybe then you would realise we are about to enter the biggest recession the world has ever seen.EA like almost every other company on the plannet are preparing for the worst.So be carefull what you wish for as your job could be next!

zaptoman
zaptoman

It only takes one look at any gaming forum to find out why EA isn't selling the number of games it expects. DRM. Securerom3 and limited installations take the game away from the consumer. They transform a product bought and paid for into a glorified rental, with the added caveat of EA control of your system. Wake up EA. Wake. Up.

s0ck69
s0ck69

i hope the people who think being made redundant is funny and something to poke a finger at lose there jobs one day.Face facts without mummy and daddys help you wouldnt last a day in the real world.This isnt about the games EA publish but about real people losing there jobs.Get a grip and grow up!

KennyBlanknshp
KennyBlanknshp

The comments below prove my point that there are more ignorant people in this world then ones who are knowledgable. I lost my job in 07 due to the economy as did the 150+ that also worked there. 60 people just got laid off 5 days before xmas. Plus there have been smaller layoffs around. All total in the last 2 years 350+ laid off in a town of 12,000. I am finally very secure in my job but are you? Those 350+ people with families thought they were. Now if half of of the 600,000 that lost their jobs last months were gamers and are no longer buting games, what do you think that is gonna do to gaming companies? Maybe if it wasn't for EA the games the companies they now possess may have never been made. Possible.

Sepewrath
Sepewrath

Its amazing how selfish and ignorant people are about someone losing their job. You may not like their games but people have responsibilities like bills and families to feed. People like you are the reason that there is little hope for humanity. "I'm a gamer" such a stupid statement I hope your only 12 so you have an excuse for being such an idiot. Otherwise you need to grow up and understand that there is a world outside of playing video games.

TigerLord
TigerLord

Thank God, EA can burn in hell with all their crappy DRM and awful support.

finchused
finchused

SgtStrungOut you are being just as ignorant as anybody else, saying that EA doesn't make good games. They can and do make good games, just because they don't appeal to you doesn't mean that it is a bad company. Am I defending EA? To an extent I suppose but I'm not too friendly with them either due to the large buy outs and all.

SgtStrungOut
SgtStrungOut

To Berlin17: Sorry kid, I'm a gamer NOT a guy who spends his time looking at sales and lay offs. I am glad this happened. EA sucks and doesnt know how to make good games anymore. All their stuff is for the casual gamer or people who dont know what good games are. Good stuff this happened. Maybe they might take this into consideration and up the quality of their weak games.

Berlin17
Berlin17

600 people loseing their jobs is good news? Some of you people are stupid

Projekt_Zeer-O
Projekt_Zeer-O

EA would do better if their games were actually good. ^_^

FinalMyrmidon
FinalMyrmidon

The problem in any market is the capacity of the consumer. Modern gamers are a lot more iffy about their games than they were when I was a kid. Even as the overall quality of games improves, I still hear countless people complaining and telling their friends to not buy games for some trite and insignificant problem. If people want to know why EA is suffering despite some quality titles lately, I'd say the obnoxiousness of the modern gamer has at least something to do with it.

tu2pac
tu2pac

Surprise! ...Not ... a first person free running game ... if you didn't dump your stack when you heard about that ... then you're a fool.

Jigsaw9798
Jigsaw9798

Um you people do realize that Dead Space was developed by an in-house EA studio, right? That means EA did make it.

matt_burke
matt_burke

Give us PC heads a BF game and we'll buy it. Turn coats!

polodoro
polodoro

Damn EA! They are the true definition of evil! They buyout the games industry and then leave it to rot. Why not just shut down all of your divisions and invest in gambling? Sure no one will be able to play any video games (at least we won't have to deal with DRM!) but at least the fat cats upstairs will get their feed!

JYoung103175
JYoung103175

I still love Madden! As far as them making bad games, just dont buy em. How else does this effect anyone? Your choice of what game you buy is yours, no one elses. I buy games I like, or get RAVE reviews, I dont look at creator or publisher, although I know some are better then others. I am a hardcore gamer, but I could give a crap less who makes them as long as they kick a$$. Ive owned every console except Sega Saturn since Atari, so I think I know a thing or two. Just play the bada$$ games, and forget the rest. What do you have to lose if they make crap?

hotrider12
hotrider12

boy wish I had a billy club right now I'll join the millions beating down on poor ol EA

Lukemaneiro
Lukemaneiro

EA has made a bunch of really bad games... But as long as they don't screw up with Battlefield and Command and Conquer, I'm fine. Why is EA taking a beating ? Because they keep making games like Harry Potter and Pokemon: Pikatchu's revenge every year.

AurusRegulus
AurusRegulus

That's what EA gets for actually trying to produce decent games. Wait, what? This really sucks.

rotnem
rotnem

Dunno, played Red Alert 3 and that's an incredibly fun RTS game. I don't much like EA, but I must admit that they have gotten better with the quality of games they're producing, such as Dead Space and Spore. They're improving, which is what counts. Just so long as EA continues this road of improvement, no matter how small, I'll be satisfied up to the point where they start making incredible games from the resources they have. Also, EA customer support is rather helpful, had a problem in a game and, since I live in the EU, called the EU costumer support (not handled by EA) and they were total jerks. Went to EA and despite me being out of their jurisdiction (spelling it wrong and using it as the best term to describe...who cares) they still helped me out, and they were quite good.

tonyhawksP8
tonyhawksP8

That's one side but the other side is Battlefield they haven't ruined that yet so maybe they haven't killed all my favourite series.

tonyhawksP8
tonyhawksP8

That teaches EA for ruining all my favourite series and taking over Westwood and other Co's

hotrider12
hotrider12

now EA will get a bite of there own a.s.s'es bit off...... hope some company swallow them up for a change. muhaaaa, muhaaaaaaaaa EA

doraemon1987
doraemon1987

yer screw them, they assimilate smaller companies and diltue their game titles, plus they r just gay

Darkman2007
Darkman2007

well maybe if they treated us like customers rather than thiefs then we would buy their games and things would be better but hey, all game companies are cutting back supposidly. its the state of the economy as well

ukogmickey
ukogmickey

Awesome News, They deserve everything they get, Thats exactly what happens when a company thinks they untouchable and treat customers like dirt, Justice is served !!!

xgalacticax
xgalacticax

EA does some pretty cool games but like Microsoft, they know they have the money so they can afford to bring out the occaasional rubbish game that they think will be succesful. If it fails, they only feel it like a mosquito bite. But yes they do have some great games. NFS Underground is still my favourite racing game ever. I weep for the NFS series now.

Jon-X93
Jon-X93

@ xtiansk8 yea that may be possible but only on a blueray disc since it holds up to 50gb think bout with just the 4 major sports(baseball,soccer,footballl,basketball) can take up to 5gb each so fitting it for a blue ray is no problem so it would have to go for a ps3

maldoror19
maldoror19

EA did not develop Dead Space, they published it!!!!!!!!! Okkkaaaayyyy! EA publish and distribute more games than they actually develop. Okkkaaaayyyy! Good. Also, sometimes things need to go bad before they get bettter.

xplosiv_shift
xplosiv_shift

[This message was deleted at the request of the original poster]

actsai
actsai

I don't exactly understand all these stock thing; kinda snagged by the description of IPO and things like these are grown-ups' trading card game. My college major was computer science not economics.

Mike_Labeckio
Mike_Labeckio

EA published DEAD SPACE. They didn't make it. Their core sports games are the ones they make. Just throwing that out there. Publishing and developing are two completely differnt things.

xtiansk8
xtiansk8

Wow. Now that gives me a cool idea. It would be awsome to combine all the sports games EA has and make them into one big game with all the sports on it. It might contain so many gigabytes of memory on that CD, but I think that would just be so awsome. I'd buy a game like that.

xtiansk8
xtiansk8

Well to be honest, I wish that EA just threw out all the bad games they make. I wish they could just stay with the good ones, like dead space. They should stop making games just becauase.... It's like, if people don't like it, then why keep making them? If you have good games, then work your way through that one. Do good games. Don't make random games just to make money. See that's what you get for doing so many games with many different franchises. Just count how many SPORTS games does EA have. Why make NBA Live 09 and NCAA 09 when you can just combine them and make an awesome game? That way you don't waste that much money, and neither do us.

firehawk998
firehawk998

I cannot believe EA made DEAD SPACE!!!!!!!!!!!!!!!!!

lamprey263
lamprey263

so basically investors pulled their money out of the company, that's why they lost money, not because of their performance in increasing their net income if anything they've done really well this year, they've introduced several new IPs into the market, and they weren't just only great games on their own, they also have the potential to be developed into series, and just this morning I read how Dead Space, Battlefield Bad Company, Army of Two are all getting sequels, which I think is great news

whodeyzach
whodeyzach

Here's a thought. Stop putting out a ton of mediocre games and spend more time making less games that are high quality. With that said, if EA kept putting out games like Dead Space we wouldn't even be talking about this. That is one of the best games of 2008. I'm still shocked that a game like that came from EA. Now we know they're capable of putting out quality games. But instead they keep putting out a ton of mediocre sports games and games like NFS: Undercover. Less volume + higher quality = more sales

ClawedMonkey
ClawedMonkey

Its not like EA has never released a good game. Dead Space is a good example and I thoroughly enjoyed it. Even though I did finish it in a single sitting on Hard, it was still a very memorable game. That out of the way, EA releases mountains of garbage aswell, much more garbage than good titles and this is the problem. You can't release 15 suck games with one good game inbetween, its really damaging to your companies name and you will never build up brand loyalty and trust. Lets face it, when an EA game is getting released, you need wait and read a small army of reviews before buying it, because its like opening a lucky packet. You may get lucky and get something good, you will probably get rubbish.

Khasym
Khasym

HD, it isn't just about one good game. EA's been clunking out a lot of BAD games. And each one has to be developed, tested, debugged, stamped, manufactured and advertised for. By buying up so many third party companies, EA bought in a lot of titles. But they aren't turning in huge profits with those purchases, which means even LESS money to go around.

HD360gamer
HD360gamer

quality games?!?!?! what about freakin DEAD SPACE. or wait, u didn't know that was made by EA did u. . .

dannyatkinson
dannyatkinson

You know investors are not stupid. If they are vested in EA they will want to know where the company stands and what is going on. They will dig deep. I don't care what anyone says I strongly believe that the backlash from SecuROM is 90% of the problem. If I was dishing millions of dollars out I would want to know everything about the company I am investing in. Just my opinion

Luftwaffe33
Luftwaffe33

Well, I have faith in EA that they will come around and release some quality games... might take a while though. I am looking forward to some of there future games :P

ottumatic
ottumatic

@blank2k2 I sincerely hope you used your brain before you made that post. If EA goes bust, thousands will lose their jobs, but only a handful will be able to land a new job within the same industry and this ain't a pretty scenario as you've painted it.