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Electronic Arts Hits Dead End, Makes Strategic U-Turn
Excerpt from the InvestorGuide.com Stock of the Day on 11/10/2009

Today, Electronic Arts (ERTS: Charts, News, Offers) posted a wider quarterly loss than expected. It earned 6 cents a share below the average analyst estimate of 7 cents. Revenue for the quarter ending September 30 fell 12 percent to $788 million down from $894 million in the same period a year ago. As a result, it announced another strategic move to once again focus on its established and successful franchises. This means EA will kill a dozen of projects, shut down facilities, cut about 1,500 jobs, and reduce the number of titles it planned to publish in 2010 to less than 40, down from the 60 plus titles published in 2008. But in a separate move, EA bought an online game company Playfish for $275 million in an attempt to gain a foothold in the social media game market. How many strategic turns can a company make before it withers on spot? Are these the right moves for EA?

First, let's take a look at the product line. Earlier this year, Electronic Arts' CEO John Riccitiello claimed that EA had previously been too reliant on licenses and franchises, and intended in future to focus on creating new IP of its own. The result has been a string of new video games that include Dead Space, Mirror's Edge, and Spore. However, the success of these new titles has been mixed at best, and Spore was probably the biggest disappointment of the year. So the company decided the strategy didn't work and is working on a change that is essentially a 180 degree departure from the original goal. On top of the 11 percent workforce reduction last year, the company will cut another 1,500 jobs, or about 17% of its workforce, close several facilities, and terminate almost half of its lineup. "We're cutting the projects and the support activities that don't make economic sense and freeing up more resources ... to push our key titles even harder," Chief Financial Officer Eric Brown said in an interview. More >


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Not Blown Away By Microsoft and Ballmer - Here is Why
Excerpt from the InvestorGuide.com Stock of the Day on 10/23/2009

Suddenly, Wall Street is in love with Microsoft again. Gone are the complaints regarding a high-profile operating system that was seemingly universally panned, the search business which loses just about the same amount of money that it makes each quarter etc. The stock is up close to 10% this morning thanks to the optimism surround yesterday's launch of Windows 7 and today's earnings report, which really was not that impressive except for the fact that it beat reduced analyst expectations largely on the back of cost-cutting. Things were not as bad at Redmond a few months as everybody would have you believe and things are not as good as today's rosy stock performance indicates. More >

Unnecessary Headaches in the Offing for Adobe
Excerpt from the InvestorGuide.com Stock of the Day on 9/16/2009

It looks like the summer ennui was getting too much to handle at Adobe. The need to spice things up combined with the release of a less than flattering earnings report seems to have pushed the software company to shell out $1.8 billion to buy a company, Omniture (OMTR: Charts, News, Offers), that offers a tangential product (at best). Adobe if offering a 25% premium to do a deal that CEO Shantanu Narayen refers to as a 'game changer'. If by that he means something that could easily result in him having to vacate his corner office, then sure it's a game changer. A great deal for Adobe it is not and here is why. More >

Take-Two Interactive Reports Q3 Loss
Excerpt from the InvestorGuide.com Stock of the Day on 9/2/2009

The downturn in the economy has produced some winners and some losers. Some companies have produced impressive results while others have posted decline after decline. Take-Two Interactive falls somewhere in between. The videogame maker is able to produce popular games, but can't seem to get earnings where they need to be. The company's popular game titles such as Grand Theft Auto IV have been blockbuster hits, but losses have continued to rise since the start of 2009. The third-quarter didn't shape up much better. Take-Two reported a third- quarter loss of $55.5 million as a result of declining sales. The loss was smaller-than-expected, but still disappointing. What were the main factors that contributed to the decline in sales? Will the company make a turnaround soon? More >

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