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Electronic Arts Is Ready for Battle

Electronic Arts (NASDAQ: EA  ) is all warmed up. The game publisher just announced earnings results, and they were better than expected almost across the board.

Shares surged on the news yesterday despite the fact that the company tried to temper expectations. EA flat-out told investors that the first quarter was just a warm-up, and it is the next three quarters that really matter. However, the Street seemed happy enough to celebrate the quarter that just ended.

There were some good reasons to cheer these results. EA beat expectations on both the top and bottom lines. And that's even with the lack of any big new releases to move. The company's two major sellers, Battlefield 3 and FIFA 13, have been on the market for 20 and 10 months, respectively. But EA managed to squeeze a lot of revenue from the titles, helping it log $495 million in sales versus the $450 million it had guided to. Earnings also came in much higher than expected, as EA booked a $0.40-per-share loss instead of the $0.62 loss it had expected.

Digital sales were another bright spot. EA got 76% of its revenue from downloads in the quarter, on the strength of content offerings for its blockbuster titles as well as mobile hits like The Simpsons: Tapped Out.

As for what's ahead, EA couldn't resist crowing about its opportunities -- particularly in Asia. The company will be bringing FIFA Online 3 to China soon. Or, as management put it, "the world's biggest online publisher is bringing the world's biggest sports game, to the world's biggest market."

Still, 2013 only gets harder from here for EA. The quarter that just ended represents a tiny 12% of the company's forecast revenue for the full year. To get the rest of that goal, EA and its Battlefield franchise will have to go through Activision Blizzard (NASDAQ: ATVI  ) and its latest Call of Duty installment. That franchise has been worth more than $8 billion in sales for Activision. The company won't let its cash cow go down without a fight. In fact, Activision has plans for a huge marketing push behind the launch of Call of Duty: Ghosts in the fall, so there are at least a few rounds left in this game.

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Related Tickers

9/30/2016 2:33 PM
EA $85.39 Up +1.13 +1.34%
Electronic Arts CAPS Rating: ***
ATVI $44.28 Up +0.07 +0.16%
Activision Blizzar… CAPS Rating: *****