To be fair, the high expectations were due to the strength of the titles released during the quarter. The Maddening crowd is far from abating for EA, with the EA Sports crown jewel selling more than 4 million copies. Other titles selling more than a million were The Sims 2, NCAA Football 2005, and Burnout 3. The strong sales were tempered with R&D costs increasing by 40% year over year, taking a toll on earnings.
The low guidance for the next quarter is likely because EA does not have a strong contender to slug it out with Take-Two's
A big issue in the conference call was the threat posed by Sega and Take-Two's ESPN sports line and whether that would eat into EA's profits. We have already dissected this matchup in detail.
Not all the news is bleak, however. The introduction of two consoles in November should provide a boost for EA. The Nov. 1 launch of Sony's
Remember, despite a disappointing forecast, this is still the Numero Uno video game company -- fiscal 2004 sales exceeded those of Take-Two, Activision
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Fool contributor Tim Goh does not own any stake in the companies mentioned.