If only Electronic Arts (NASDAQ:ERTS) could go back to the last save point and try this level over again.
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 (NASDAQ:ATVI) continues to smoke past Wall Street estimates, and analysts haven't slashed their profit expectations on EA's archrival. The economy isn't doing EA any favors, but it really never had a deep enough roster of homegrown titles to have the sort of monster year that Activision and Take-Two are currently enjoying.
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.
