Earlier this week, I pondered Activision's
Electronic Arts experienced surging sales from the popularity of its video games -- fourth-quarter revenue jumped 84% to $1.13 billion -- but that wasn't enough. The video game publisher's fourth-quarter net loss widened considerably over last year, to $94 million, or $0.30 per share, compared with last year's net loss of $25 million, or $0.08 per share.
Although the quarter beat analysts' expectations on an adjusted basis, many investors seem to be thinking "game over," especially since EA turned in a rather tepid forecast and gave reason to believe that the pesky "enhancing profitability" portion of EA's picture remains fuzzy at best.
EA also said it will stop offering quarterly forecasts. Although corporations' forecasts can be unreliable, I'm not sure what EA's decision to stop giving them at all -- at a time when many investors are already wondering what the heck its deal is -- says about its chances of getting its act together in the short term. And honestly, I'm never a fan of companies that offer less information for investors to chew on.
With the exception of Activision, many video game publishers just aren't making the grade these days, even though video games seem to be more popular than ever before. I recently looked at THQ
Meanwhile, EA continues to covet Take-Two Interactive
I've often said I prefer video game industry leaders as investment ideas. For now, though, Activision is the only contender that I consider up to the sector's current challenges. I can't help thinking that EA is like the equivalent of computer Solitaire these days -- it'll keep your attention, and it's something to do, but it's not like you're amped up to win or anything.
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