Jim Cramer is right... ERTS is a Strong Playfish buy!
January 13, 2010
– Comments (2) |
RELATED TICKERS: EA
, ATVI
ok.. I badly badly badly wanted to jump on the bandwagon and say "Jim Cramer is wrong.. see? ERTS went boom!"
However... I can't.... Despite how bleak ERTS looks given their lowered outlook and the sheer dominance that is Call of Duty... The fact of the matter is ERTS finally did something right.
Several months ago.... There was an article on www.gamespot.com which was an interview between Gamespot Journalist and one of the heads of Blizzard Entertainment. This interview was about 2 things:
1) Games that are online, free, and make their money by selling small packages of content to enhance your gameplay and whether World of Warcraft would go that route.
and
2) Blizzard revealed that another MMO was being developed and it wasn't going to be anything like World of Warcraft, so that it would not compete with World of Warcraft.
That #2 revelation combined with #1 got my Spidey Speculative Senses tingling... I said emphatically that the biggest problem with ATVI is that they do not have anything to appeal to the "Casual Gamers" and it is the "Casual Sector" of video gaming that has grown the most in recent years. With Apple iPhones and POGO and FREESLOTS and gosh darn near TONS of Casual gaming sites out there.... So, I speculated the secret...secret...MMO is going to be something that will appeal greatly to the Casual Gaming Sector taking full advantage of the newly upgraded Battle.net features to support a robust Casual Gaming Platform.
Of course.. I was *guessing* but that is what Specualting means... pure guessing.
Now SINCE THAT article.... we have seen ERTS buy Playfish.... But guess what? They aren't the only Video Gaming Stock on the market jumping on the Casual Gaming sector.
On Tuesday, SHANDA GAMES (GAME) made the announcement of their intent to buy Mochi Media.... This is another major player in the Casual Gaming Sector.
ERTS.... then GAME....... Whose next? Who cares....
I am extremely bullish on any STOCK in the Video Gaming Sector that jumps on the Casual Gaming Sector... Even if the only revenue you get is the sale of Advertising.... The fact that hundreds of millions could flock to your site tends to translate to a whole lot of $$$$$ revenue.
And in this troubled Video Gaming Sector Economy.....Macro....Casual Gaming is King!
However.. unlike JIM CRAMER... I do not recommend a "Pairs Trade" where you would buy GAME OR ERTS while SHORTING ATVI..... And that is because any press release coming out in which ATVI jumps on board the Casual Gaming Sector either through Blizzard's yet to be announced MMO or with Activision purchasing some other Casual Gaming Company..... Your Shorts would have to cover.
Just like ERTS..... ATVI has a lot of cash on the balance sheet.... and a real smart C.E.O.
So no Pairs Trading.... Not that I ever get into Shorting anyhow.. I don't.... too risky...
But.... Don't toss ERTS aside because of a bleak outlook...eventually the benefits of Playfish will reveal themselves.
DISCLOSURE:
A) Varchild may be a Moron but he isn't one in the Video Gaming Sector....
B) Varchild2008 owns 688 shares of ATVI and 270 shares of GAME
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