If only Electronic Arts
The video game software giant is slashing its revenue and earnings projections for fiscal 2009. EA isn't issuing new targets -- just warning that it will miss its earlier guidance. The company previously called for non-GAAP earnings of $1.00 a share to $1.40 a share, on non-GAAP net revenue of $5 billion to $5.3 billion for its fiscal year ending in March.
Sure, an industry like video games, at the mercy of consumers' disposable income, will naturally take a hit when money is tight. More than a few warning signs suggested that the holidays would be rough for the industry in general:
- Leading niche retailer GameStop
(NYSE:GME) got slammed after posting a lackluster quarterly report last month. - Six different analysts downgraded THQ
(NASDAQ:THQI) last month, after the video game publisher cut its own outlook. -
Sony
(NYSE:SNE) announced layoffs this week. The overhead cuts aren't PS3-related, but perhaps Sony could have held firm if PS3 sales were hopping.
Then you have the EA-specific clues:
- EA ended combination talks with Take-Two
(NASDAQ:TTWO) in September, putting more pressure on its in-house titles to deliver big sales. - The much-delayed and much-hyped Spore sold well, but it's fallen far short of this year's hottest titles.
- The company moved 4.5 million copies of Madden 09 in its latest fiscal quarter, flat with last year's installment. Remember when Madden was a growing franchise?
Don't assume that all game makers are doomed, though. Industry leader Activision Blizzard
A convenient save point has never seemed so far away.
Level up with further Foolishness:
- EA walked away from Take-Two in September.
- Its tender offers didn't come as tender or offers to Take-Two shareholders.
- What are you waiting for? Here is your shot to score big.