Electronic Arts Inc. (EA): This Gaming Company Is in Deep Trouble

Banking on the success of Call of Duty: Black Ops II and Skylanders: Giants, Activision Blizzard reported better-than-expected earnings for its fourth quarter ending Dec. 31, 2012. Talking about the performance of the stock, Activision Blizzard’s one year return is the highest in the industry. At 17.10%, Activision Blizzard’s one year return is more than EA’s returns of 11.9% and Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s return of 2.09%.

But, 2013 may prove to be a crucial year for Activision Blizzard as the next generation of gaming consoles will be launched in the year. The transition from the present consoles to the new consoles may affect the performance of Activision in the short-term.

Take-Two Interactive Software’s business performance has been hit due to the cold response its recent games, Spec Ops: The Line and Max Payne got from users. Take-Two has high hopes from Grand Theft Auto V, the release of which has been delayed to September 17, 2013. Take-Two has a market cap of $1.24 billion, but its earnings per share is negative at around $(1.40) per share, which is a cause of worry.

Outlook

Electronic Arts is expected to announce its fourth-quarter and fiscal year 2013 results on May 7, 2013. It expects revenue and earnings for the current quarter to be less than the previously issued guidance. In such difficult times, EA has put its hopes on the next generation of consoles which will come out this year. These consoles from Sony and Microsoft might revive Electronic Arts’ fortunes.

The article This Gaming Company Is in Deep Trouble originally appeared on Fool.com and is written by Sujata Dutta.

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