Category: ERTS


ERTS: CEO Memo Talks Down August Performance in Front of NPD Data

Event:
Bloomberg is reporting that ERTS CEO John Riccitiello sent an internal memo today to employees that says August industry sales were down for the industry and Madden “was also down with that trend”
Riccitiello: “It is discouraging that one of our highest-rated and best-marketed ‘Madden’ titles in years is facing strong headwinds”
See article for more detail

Conclusion:
Modest negative. The Street is already expecting a meaningful decline in August industry sales of approximately 15% Y/Y. Expectations for Madden are for down 5-10%. If Madden sales are down the same “trend” as the industry Madden could disappoint versus expectations. However, it is a little vague to pin down the exact number. It is definitely a change of tone from the Company, which has been more bullish on Madden in previous comments
Video game publishers and retailers receive the NPD data early and Riccitiello likely has advanced knowledge of the results and wanted to brace his employees for another sour month 
However, from the Street’s perspective, it should not be much of a surprise that the industry and Madden were down in August. As we previewed yesterday:
We are expecting August industry sales to decline 16% year-over-year and we do not believe the Street will be surprised by another down month
We expect Madden sales to decline 9%. The decline is partially attributable to the game being in the market for 3 fewer days this August
We have spoken to the company, which is doing investor meetings at an investor conference today, but is not doing a public presentation. They did not refute the commentary from the memo. They are not giving a formal update to their expectations on Madden at the conference
We are not ready to change our estimates based on this commentary
Our position on ERTS remains that it should be able to reiterate its $1 EPS target for F2010, which will make stock trade up at these levels. We see a $23 fair-value based on our $0.95 F2010 EPS estimate. We are not in love with ERTS and its slate is nothing to write home about, but believe expectations are sufficiently low.

ERTS, Games - September 10th, 2009 — 10:36am

A Few Hits, No Delays Make for a Solid Start to F2010

Electronic Arts Inc.
Rating: Outperform
Price: $21.89
 
FQ1 upside from ‘Sims 3,’ ‘EA Sports Active.’ Electronic Arts reported fiscal Q1 (June) revenue and loss per share of $816.0 million and ($0.02) versus our estimates of $730.0 million and ($0.15). Revenue upside came from better shipments of Sims 3 internationally and EA Sports Active. EPS also benefitted by $0.06 from lower bonus expense. EA reiterated its full-year guidance despite beating its internal forecast.

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ERTS, Games - August 5th, 2009 — 5:02am

E3: THQ’s Analyst Event; Details on EA’s MMA Game

Event:

THQ (THQI, Sector Perform) hosted its E3 analyst event on Tuesday afternoon

Conclusion:

Positive. THQ announced it has shipped 2M units of UFC so far, which is better than our quarterly estimate of 1.9M. We’ll need to revise our forecast modestly higher as we approach the end of the quarter and we can better assess the success of its two other big Q2 releases: Red Faction and Up

Our Q2 sales estimate is above the Street already, so we believe the Street is also low. We are approximately $0.05 below the Street on EPS, which is a bigger question and we are not yet convinced that they will beat the Street forecast given the expenses associated with the launches of these three games.

The remainder of THQ’s announcements were not as  impactful. It highlighted its slate for this year, which had been shown to the press in some detail already. While it expressed satisfaction with Red Faction and Up it did not give any quantification.

A note on EA’s new game MMA:

We had a chance to ask EA in our small group meeting about its plans with MMA, the new competitor to THQ’s UFC game. A few key points:

Has been looking at MMA since Peter Moore, the head of EA Sports got to EA in 2007 and a team came quickly together at EA Tiburon. Obviously given the release date, development is well underway

They will have rights to fighters on an individual fighter basis. Some will be exclusive to UFC (the one’s that Dana White has rights for) but many will be negotiated on a fighter by fighter and manager by manager basis

EA doesn’t expect to compete on day one with quality that equals the second UFC, but instead intends to build the franchise over time

It envisions releasing the game every two years, with the release of Fight Night in the other years. This lends to our theory that EA moved up Fight Night to try to put more competitive pressure on this years UFC.

Electronic Arts says it has long-term interest in this space and it will be around for a while. We continue to believe that it will be difficult for them to compete with THQ, but that EA will aggressively pursue the UFC license and either take it or make it more expensive for THQ somewhat limiting the profitability opportunity for THQ. The opportunity is still large, but not as epic as it could have been.

ERTS, THQI - June 3rd, 2009 — 9:58am

ERTS, ATVI, THQI: Electronic Arts E3 Press Conference

Event:

Electronic Arts held its E3 press conference on Monday. EA’s press conference had a few minor announcements that are of note.

Conclusion:

Modest positive for ERTS. EA announced solid sales of EA Sports Active and announced a few new titles that should have a modest positive benefit to upcoming quarters although neither of these things move our estimates in the near-term

Negative for THQI. Electronic Arts announced it is creating a mixed martial arts (MMA) game, which will compete with THQ’s recently-launched UFC game. It will likely impact THQ’s game in F2011 and make it more expensive to retain the license in F2011. The UFC game is the most exciting thing THQ has going right now.

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ATVI, ERTS, THQI - June 2nd, 2009 — 11:41pm

MSFT Keynote at E3

Event:

Microsoft presented its Keynote today at E3

Conclusion:

Modest Positive for ATVI, ERTS, THQI, TTWO, UBI. We believe Microsoft’s new technology code-named Natal (see details below) is a potential important addition to the 360 platform that will at least enhance it as a multimedia and casual game device. The further expansion of the casual games business is positive for the third-party publishers, especially because they should be better leveraged to the expansion because Microsoft isn’t as competitive with casual gamers. To the extent that Natal eventually enhances hard-core games it could offer another reason for consumers to choose video games over other forms of entertainment.

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ATVI, ERTS, THQI, TTWO, UBI.FR - June 2nd, 2009 — 11:35pm

Schedule, Charts and Releases

U.S. PC Games 5/10-5/16 – Publisher (Avg. Price)

  • WoW: Lich King – Activision Blizzard ($39)
  • Sims 2: Double Deluxe – EA ($20)
  • Empire: Total War – Sega ($33)
  • WoW Battle Chest – Activision Blizzard ($35)
  • Left 4 Dead – EA/Valve ($29)
  • Spore – EA ($40)
  • World of Warcraft – Activision Blizzard ($20)
  • Fallout Trilogy – Bethesda ($20)
  • Fallout 3 – Bethesda ($42)
  • Sims 2: Apartment Life – EA ($20)

ATVI, ERTS - May 27th, 2009 — 8:51am

PS3 News: Analyst: EA Has Missed The Boat This Generation

Test test

ERTS - May 26th, 2009 — 5:05pm

Techtree.com India > News > Gaming > Apple Game to Buy EA?

Another test

ERTS - May 26th, 2009 — 4:12pm

EA Sports unveils NCAA Football 10 cover athletes

Michael Crabtree, Brian Johnson, Brian Orakpo and Mark Sanchez

ERTS - April 23rd, 2009 — 8:56am

ERTS: Dante’s Inferno coming to PSP

In addition to PS3/360

ERTS - April 23rd, 2009 — 8:48am

     

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