Thursday, May 05, 2005

Electronic Arts is in trouble

Lately we have been reading about the difficulties that Electronic Arts faces. Company seems to have taken the wrong off-ramp and is now stuck in competition and lack of demand for their games. Earnings have plummeted and there does not seem to be much to rave about in their present product slate. Shift to next generation video game consoles will just devour money and the company has also pushed very hard to invest into franchises. Bringing their game titles up to speed with content and technological development.

The problem for Electronic Arts is temporary. In relation to revenue its stock is expensive and near-future development looks dim so expect further decline in the price of the stock. Competitors like Activision and Take Two Interactive are cheaper and smaller. These smaller competitors now have good chances to score big growth with couple of successful games. Expect investors to make some changes in their video game company portfolios. Short-term prospects are appalling for EA, but it will get better just wait and see.
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