Does EA Stand For Errant Assumptions?
Electronic Arts: The Turnaround Is At Hand For This Fallen Angel - Buy On Headline Weakness
David Weinstein • 52 Comments
David Weinstein • 52 Comments
Does EA Stand For Errant Assumptions?
Nov. 18, 2014, 12:47 PM
- Citing the company's digital revenue growth and cost-cutting efforts, Barclays' Christopher Merwin has launched coverage on Electronic Arts (NASDAQ:EA) with an Overweight rating and $48 target.
- Merwin: "EA has been proactive in adding new, high-margin digital revenue streams, while simultaneously cutting costs and rationalizing its product pipeline to drive margin expansion.
- He also argues digital content such as the Ultimate Team features for FIFA and Madden titles is "helping EA to increase the engagement levels of its player-base, a trend that should improve revenue visibility for EA's core titles and eventually transform the console-game publishing business into a higher multiple subscription model with less volatility."
- Shares have made new highs, and are up 86% YTD.
Nov. 14, 2014, 5:35 PM
- After coming in at #1 in NPD's September U.S. retail video game rankings (following a blockbuster Sep. 9 launch), Activision's (NASDAQ:ATVI) Destiny fell to #5 in October. Take-Two's (NASDAQ:TTWO) NBA 2K15, which launched on Oct. 7, took its place at the top.
- Borderlands: The Pre-Sequel, launched by Take-Two on Oct. 14, was #4. Skylanders Trap Team, which Activision released on Oct. 2, was #6.
- Electronic Arts' (NASDAQ:EA) FIFA 15 and Madden NFL 15 were #7 and #8, down from #3 and #2 in September. The Sims 4 fell out of the top-10, as did Activision's Diablo III: Reaper of Souls.
- Altogether, NPD estimates U.S. physical retail game sales fell 27% Y/Y to $350.3M. They were down 36% in September, thanks in part to tough comps caused by last year's GTA V launch. Xbox One/PS4 demand led console sales to rise 59% to $273.6M; Microsoft cut One prices by $50 early in November.
- The digital transition continues: SuperData Research estimates U.S. digital game spending rose 12% Y/Y in October to $957M.
- Activision's Call of Duty: Advanced Warfare launched on Nov. 3, and should be at or near the top of NPD's November rankings. Metacritic gives the game a score of 77/100.
- ATVI -1.2% in regular trading. TTWO +2.5%. EA +0.1%.
Nov. 11, 2014, 6:59 AM
Oct. 31, 2014, 5:28 PM
- Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
- VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
- Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
- GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
Oct. 28, 2014, 4:32 PM
- Electronic Arts (NASDAQ:EA) expects FY15 revenue of $4.175B and EPS of $2.05; the former is slightly above a $4.16B consensus, while the latter is well above a $1.92 consensus.
- FQ3 guidance is for revenue of $1.275B and EPS of $0.90 vs. a consensus of $1.3B and $0.86.
- Shares +3.6% AH
- FQ2 results, PR
Oct. 28, 2014, 4:06 PM
- Electronic Arts (NASDAQ:EA): FQ2 EPS of $0.73 beats by $0.20.
- Revenue of $1.22B (+17.3% Y/Y) beats by $60M.
- Shares +5.92%.
Oct. 27, 2014, 5:35 PM
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Oct. 17, 2014, 1:55 PM
- With last year's Grand Theft Auto V (TTWO +0.3%) launch skewing comps, NPD estimates U.S. physical retail video game sales fell 36% Y/Y in September to $481.2M, a worse decline than August's 21% drop.
- The ongoing spending shift towards digital channels naturally contributed to the drop as well: SuperData Research estimates digital game spend rose 8.6% Y/Y in September to $873M.
- Hardware spend rose 136% Y/Y (up from August's 116%) thanks to next-gen console demand: NPD thinks PS4 sales nearly tripled from August levels with the help of Sony's (SNE +1.8%) Destiny bundle, and outpaced Xbox One sales yet again. GameStop (GME +2.7%) investors approve of the numbers.
- Electronic Arts (EA +4.5%) is rallying after Madden NFL 15, FIFA 15, NHL 15, and The Sims 4 respectively came in at #2, #3, #6, and #8 on NPD's top-10 list. Of the four games, only Madden was on the August list (#1 in its launch month). Battlefield 4 (#9 in August) fell out of the top-10.
- As expected, Activision's (ATVI -0.5%) Destiny was #1. But Diablo III: Reaper of Souls fell to #10 from #2, and Call of Duty: Ghosts (#5 in August) dropped out of the top-10. Activision, like Take-Two, is sitting out a market rally.
- EA reports on Oct. 28, Take-Two on Oct. 29, Sony on Oct. 31, and Activision on Nov. 4.
Oct. 14, 2014, 1:19 PM
Oct. 10, 2014, 10:21 AM
- Believing Electronic Arts' (EA -0.2%) FY16 (ends March '16) will benefit from a strong game lineup and installed base growth that's 50% better than the prior console cycle, Benchmark's Mike Hickey has upgraded the game developer to Buy, and set a $42.50 target.
- Hickey predicts "investors will begin to focus on fiscal ’16 performance opportunity over the next quarter, which should accelerate target valuation considerations."
- Shares opened higher, but have given back their gains amid a Nasdaq selloff. FQ2 results arrive on Oct. 28.
Sep. 12, 2014, 8:37 AM| Sep. 12, 2014, 8:37 AM
Sep. 9, 2014, 7:52 AM
- A channel check from Cowen Research analyst Doug Creutz indicates video game console/handheld software sales fell 10% Y/Y in August.
- The monthly tally would look even worse if not for the positive comp delivered by this year's Madden NFL game.
- Related stocks GameStop (NYSE:GME), Electronic Arts (NASDAQ:EA), Take-Two Interactive (NASDAQ:TTWO), and Activision Blizzard (NASDAQ:ATVI).
Aug. 15, 2014, 9:08 AM
- Video games sales fell 15% Y/Y in July, according to data from the NPD Group. The tally is for sales at physical retail outlets such as GameStop (NYSE:GME), Best Buy (NYSE:BBY), and Target (NYSE:TGT).
- The comparable to last year was impacted by a dispute between the NCAA and student athletes which prompted Electronic Arts (NASDAQ:EA) to stop producing its popular NCAA football series amid the legal dispute.
Jul. 29, 2014, 4:02 PM
- For $4.99/month or $29.99/year, Electronic Arts' (EA -2.1%) EA Access service will provide Xbox One users access to a library of titles. FIFA 14, Madden NFL 25, Peggle 2, and Battlefield 4 are the first supported games; more are promised.
- The service also provides a 10% discount on EA digital content purchases made via the Xbox Games store, and trial access to new EA games (including Madden NFL 15 and FIFA 15) up to 5 days before the release date. GameStop and Amazon are among the retail partners.
- No word on whether a similar service will arrive for the PS4. The service points to a willingness by EA to cannibalize traditional game sales in favor of subscription-based revenue streams.
- EA's digital revenue rose 28% Y/Y in FQ1 to $482M (62% of total revenue). Full game downloads accounted for $71M of that total.
Jul. 22, 2014, 5:55 PM
- Though it soundly beat FQ1 estimates, Electronic Arts (NASDAQ:EA) is guiding for FQ2 revenue of $1.14B and EPS of $0.50, nearly in-line with a consensus of $1.14B and $0.51. Moreover, FY15 (ends March '15) guidance is for revenue of $4.1B and EPS of $1.85, below a consensus of $4.14B and $1.89.
- With the help of Titanfall, UFC, and FIFA 14, EA's packaged goods and other revenue rose 150% Y/Y in FQ1 to $293M, helping drive a big revenue beat. Digital sales rose 28% to $482M, with mobile revenue rising 18% to $120M (15% of total revenue) and full game downloads 87% to $71M.
- North America revenue +57% to $321M, international revenue +57% to $454M. The Xbox One/PS4 accounted for 26% of revenue, and the Xbox 360/PS3 35%. PCs made up 21%.
- Job cuts allowed R&D spend to fall 5% Y/Y to $265M. G&A spend +4% to $88M. $50M was spent on buybacks.
- Shares have priced in some good news.
- FQ1 results, PR.
Jul. 22, 2014, 4:05 PM
- Electronic Arts (NASDAQ:EA): FQ1 EPS of $0.19 beats by $0.23.
- Revenue of $775M (+56.6% Y/Y) beats by $65.85M.
- Shares +4.5%.
Electronic Arts, Inc. is a global interactive entertainment software company. The company is organized into three divisions: EA Studios, EA Mobile and Maxis. The EA Studios division is responsible for developing games and related content and services across an expansive range of game categories.... More
Industry: Multimedia & Graphics Software
Country: United States
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