Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Wednesday, August 02, 2006

Electronic Arts Gets Back In The Game


Electronics Arts did pretty well, for once. It's been a long time.

Revenue grew 13% to $413 million, but the company had earlier forecast a revenue decline. Investors who thought that the video game market was down for the count may have been wrong. New games coming online, like EA's soccer video game, have done well.

EA's shares are finally recovering as well. The stock bottomed for the year at about $40. It had been just below $70 in April 2005. It trades up on earning at $49.

EA is not the only company benefitting from new products and a brisk market in games. Game maker THQ reported revenue of $138 million in its most recent quarter. Expectations were for $125 million and for the current quarter the company projects hitting $195 million. The stock has bounced off its 52-week low and is up 24% from that bottom trading at $23. Sales of its "Cars" game and its success overseas helped drive revenue.

After a long walk in the desert, investor should not be surprise to see Activision make a comeback as well. The company's popular "Doom" franchise will be moving onto the new hardware platforms from Sony, Microsoft, and Nintendo. The Activision stock trades at $11.98, not much above its 12-week low of $10.47. The company's shares changed hands at over $18 in November of last year.

Calling the cycle in an industry like video games is hard, but it appears as it a wave way out at sea may reach the shore sooner than expected.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger