Here's Why Microsoft and Electronic Arts are Plunging

Shares of Dow Jones Industrial Average (DJINDICES: ^DJI  ) component Microsoft (NASDAQ: MSFT  ) plunged early Thursday after closing near a multiyear high a day before. Among other tech companies, Electronic Arts (NASDAQ: EA  )  shares dropped while SolarCity (NASDAQ: SCTY  )  shareholders enjoyed a noticeable gain. The Dow Jones itself was down about 50 points as of 11:35 a.m. EST.

GDP beats expectations
The U.S. GDP report came in better than expected early Thursday, showing that the nation's economy grew 3.6% in the third quarter. Economists had expected an increase of 3%. While a stronger-than-expected GDP report is generally regarded as a good thing for the economy -- and therefore the stock market -- investors may be projecting the effects such a report would have on the Federal Reserve's decision-making.

With the economy seemingly improving at a greater rate than anticipated, the Fed may be more likely to cut back on its economic stimulus measures.

SolarCity jumps on Tesla battery integration
Shares of SolarCity were getting a nice boost early Thursday, jumping more than 5% after the company announced a deal with electric car maker Tesla Motors. SolarCity's chairman, Elon Musk, is also Tesla's CEO.

SolarCity is still an upstart energy company, hoping to provide power from the sun on a mass scale. Under the deal, the company will start offering a bundle of Tesla's batteries alongside its solar panels. The batteries will initially be expensive, and may not make sense for many of SolarCity's customers, but by offering a battery backup solution, SolarCity's panels can provide power even when the sun isn't shining.

Electronic Arts halts production
Video game publisher Electronic Arts said it would halt production of all projects currently under development at its DICE studio. DICE is the developer of Battlefield 4, EA's competitor to the wildly successful Call of Duty franchise from Activision Blizzard. Unfortunately for EA, Battlefield 4 has suffered from numerous bugs and connectivity problems. Many of the game's users have complained that Battlefield 4 cannot be played at all in its current state. 

By shifting the studio's full resources to fixing Battlefield 4, EA is acknowledging the problems and could have them resolved faster. But the announcement may indicate that Battlefield 4's problems were far more severe than investors had expected.

Microsoft drops after closing near multiyear high
Microsoft was underperforming the Dow early on Thursday, shedding more than 3% after closing near a multiyear high on Wednesday. Speculation circulated that Ford CEO Alan Mulally would not be named Microsoft's next CEO. Mulally, who has had successful executive stints at Ford and Boeing, was widely expected to take over the Windows maker following Steve Ballmer's retirement.

Although he isn't know for being a tech visionary, Mulally helped design Microsoft's recent reorganization and may be best equipped to help remake Microsoft's corporate culture. Admitedly, it's only speculation, and Mulally could still be named Microsoft's next CEO, but for now, investors appear to be reacting by selling shares.

Our top stock for 2014
The market stormed out to huge gains across 2013, leaving investors on the sidelines burned. However, opportunistic investors can still find huge winners. The Motley Fool's chief investment officer has just hand-picked one such opportunity in our new report: "The Motley Fool's Top Stock for 2014." To find out which stock it is and read our in-depth report, simply click here. It's free!

Read/Post Comments (0) | Recommend This Article (1)

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.

DocumentId: 2753685, ~/Articles/ArticleHandler.aspx, 4/19/2014 1:14:15 AM

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...