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Electronic Arts (EA) Falls on Lower Sales Estimates

By  +Follow October 2, 2013 9:48AM
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Shares in video game maker Electronic Arts (EA) fell sharply Wednesday after analysts raised concerns about the company’s sales moving forward. Shares in Electronic Arts were off by almost 3 percent just a few days after the company announced that it would be discontinuing its NCAA game next year due to legal concerns.

Protracted Legal Battle Ends NCAA Games

Some of the most popular titles for Electronic Arts have always been their college sports themed games, but a recent lawsuit has thrown their continued existence into question. Many former student-athletes have sued over the use of their images without permission, leaving Electronic Arts potentially exposed.

“The ongoing legal issues combined with increased questions surrounding schools and conferences have left us in a difficult position,” Weber wrote. “One that challenges our ability to deliver an authentic sports experience, which is the very foundation of EA Sports games.”

News came on Sunday that Electronic Arts had agreed to settle with the former athletes for some $40 million.

Analyst Expects Lower Sales for EA

Wednesday’s decline, though, appears to be a reaction to analysis from Cowen & Co.’s Doug Creutz. Concern over depressed sales for Medal of Honor: Warfighter led Creutz to tell Games Industry "Since late July we have been cautious about EA's ability to reach management'shttp://images.intellitxt.com/ast/adTypes/icon1.png FY13 guidance due to our view that Medal of Honor: Warfighter appears likely to be a major disappointment. Based on our read of pre-release tracking data, we think the game might struggle to sell through 2 million units worldwide."

Lowered expectations for sales combined with legal trouble and the loss of one of its most popular titles helped push shares down on Wednesday, continuing a month-long stumble that’s starting to mar an otherwise successful year. The stock’s down over 3.5 percent since the start of September, but it had climbed almost 85 percent over the first eight months of the year.

 

 

[Image Courtesy of Wikimedia Commons]

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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By  +Follow October 2, 2013 9:48AM
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