14 DAY TRIAL // After the launch of the biggest videogames of 2008, analysts are looking at the relative power of the various publishers, judging which are on track to meeting their financial projections and which are going to present worst than expected figures.
Electronic Arts is now in the spotlight, with people like Michael Pachter, from Wedbust Morgan, lowering the rating of the publisher from “Strong Buy” to “Buy”. He justified this by saying that “After 20 months of believing that the EA turnaround was just around the corner, our patience and confidence has eroded. With the stock hovering near a seven-year low, management continued its recent history of disappointment. Just when investors began to believe that things couldn’t get worse, they did, and we believe that investors remain skeptical that management is on the right track”.
Electronic Arts has set itself a very ambitious goal of 6 billion dollars in revenue, with 1.5 billion being operating profit. The current economic situation and the sales numbers that have come out in recent months make this target very difficult to reach.
Colin Sebastian, from Lazard Capital Markets, revealed that “Time will tell whether these steps will effect better market performance, but we believe more aggressive restructuring is appropriate given that EA has yet to demonstrate meaningful franchise growth or operating efficiencies midway through the current console cycle”.
John Riccitiello, the chief of Electronic Arts, already announced that the company would again lay off staff and would try to further streamline its business. More games are set to be cancelled, like Tiberium was this year, and the company is thinking of consolidating some studios.
Analysts have pointed to Need for Speed Undercover, Mirror’s Edge and Rock Band 2 as underperforming this holiday season. Still, Riccitiello says that Mirror’s Edge is set to get a sequel next year.