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Media

The EA Conundrum.. An Earnings DUI (ERTS)

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By Douglas A. McIntyre Updated Published
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Electronic Arts Inc. (NASDAQ: ERTS) is driving while intoxicated.  The company cannot find its footing and cannot find its way home.  In fact, things are getting to the point that many holders and traders are starting to hope that the price of the stock is low enough that the company will just get acquired.  The video game giant reported non-GAAP earnings of $0.33 EPS and $1.35 billion in revenue versus Thomson Reuters estimates of $0.31 EPS and $1.34 billion in revenues.   It is not this quarter that is a mess, even though it issued an earnings warning.

For the coming quarter, EA sees $0.02 to $0.06 in non-GAAP EPS on revenues of $800 million to $850 million.  Thomson Reuters is at $0.13 EPS and almost $851 million in revenues.

For fiscal-2011, EA sees revenues of $3.45 to $3.7 billion.  There it sees non-GAAP EPS of $0.50 to $0.70 in non-GAAP EPS.  Thomson Reuters has those figures at $0.74 EPS and $4.07 billion in revenues.

Many will argue that the company is sandbagging the forward guidance to keep estimates low enough that they can be hit.  The problem is that the numbers keep coming down from the company and from analysts.

We could look all through the data, but this is just a battleground now,  an ugly and bloody battleground.

Shareholders are pounding it lower for now as well.  The stock closed up 1.3% at $17.49 today, but is down at $16.20 in active after-hours trading.  The 52-week trading range is $14.75 to $23.76. Long gone are the highs over $60 back in 2005.

The beatings will continue until morale improves.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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