What Are the Risks Facing EA?

Its no secret the past five years have been challenging for Electronic Arts  (Nasdaq: EA  ) ; a quick look at its stock chart confirms the continuing setbacks that have befallen the company. I created a premium report on EA to help investors examine EA's future. 

Following is an excerpt from the report, which focuses on the main risks facing the company. It's just a sample of one section, but we hope you enjoy.

Risks
When Pacific Crest analyst Evan Wilson downgraded shares of EA in late October, he detailed the "unimaginably disappointing" events at the company over the past year. The initial failure of Star Wars: The Old Republic made the cut, but so did the shortcomings of the NBA Live and Medal of Honor franchises.

EA doesn't need to hit on all cylinders. It can afford to skip an NBA season or see SimCity Social flop. However, if misses begin to outnumber the hits – and those hits aren't base-clearing homers -- EA will have problems.

It's also important to remember that the push for digital isn't a magical fountain of youth. Investors that bought into Zynga's IPO at $10 now know firsthand how even attracting tens of millions of players to a single game isn't enough to assure healthy financials. In fact, diving deeper into EA's own digital performance, we see that the Facebook  (Nasdaq: FB  ) gaming craze isn't just wearing on Zynga. EA reported 42 million monthly active users on social games at the end of fiscal 2013's second quarter, sharply below the 101 million monthly active players it was attracting a year earlier.

The gaming industry is in a state of transition. The slowdown in both console and even PC sales require an emphasis on the tablets and smartphones where casual gamers are passing the time. EA has the brands to matter, but the money to be made may not rival what the company was making when folks were gladly shelling out $50 or $60 for a new game.

Looking for more guidance?
That was just a sample of our new premium report on EA. If you're weighing whether the company is a buy or sell, the report is an essential resource for investors seeking more information on the company. Not only that, but the report also comes with updated quarterly guidance and dives into upcoming catalysts on the horizon. To get started, simply click here now


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2106361, ~/Articles/ArticleHandler.aspx, 9/14/2014 10:05:02 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement