EA tops forecasts but still posts loss, investors not so happy - RaychelSnr's Blog

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RaychelSnr's Blog

EA tops forecasts but still posts loss, investors not so happy Stuck

Posted on November 2, 2010 at 06:14 PM.

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From CNBC:

Quote:

Video game publisher Electronic Arts says its fiscal second-quarter net loss narrowed, and its adjusted results handily surpassed expectations thanks to strong sales of the latest "FIFA" and "Madden" games.

For the three months ended Sept. 30, EA posted a net loss of $201 million, or 61 cents per share.

This compares with a loss of $391 million, or $1.21 per share, the same time last year.

On an adjusted basis, however, EA says it earned a profit of 10. The company had forecast a loss. EA's adjusted revenue was $884 million. Analysts, on average, were expecting an adjusted loss of 10 cents per share on revenue of $815 million, according to a poll by Thomson Reuters.

Looking ahead, the company, which affirmed its view for the fiscal year, said it expects current quarter earnings of between 50 cents to 60 cents a share on revenue of $1.375 billion to $1.5 billion. Wall Street analysts, on average, were expecting a 70-cent profit on revenue of $1.44 billion.

Shares of EA were down in extended trading Tuesday. Get after-hour quotes for Electronic Arts here.

Chris' Take/Laymans Terms: Thanks to strong sales from FIFA and Madden, EA posted a surprise profit this past quarter. However, their guidance for future earnings is below what investors expected thus their stock is down (as of this writing) around 2%.

This is good news for EA though. The NBA Elite fiasco shouldn't weigh too heavily on EA for this current quarter. However, EA is giving investors no reason to invest more heavily into them going forward. With the stock trading in the $15 - $20 range the past year, it's still WAAAAY below it's all time highs up near $70 back in 2007/2008. In fact, EA's stock has only managed to bounce off of it's 3 year lows for the past 2 years.

At this point, I think the company might be ripe for a bid from someone like Disney in the coming year or two, the price of entry is rather favorable and with the video games market relatively stabilized...if there is a blockbuster change in the media realm I think it'll involve a Disney getting their hands on EA. However, it's just pure speculation at this point by me given that we haven't heard anything on the "Disney wants to buy EA" front for over a year.

Overall though, a positive if not conservative quarter for the Sports Gaming giant.