Electronic Arts, Inc. (ERTS)

Electronic Arts remains the clear leader in interactive entertainment, one of my favorite industries, probably the one I know best. While I can demean EA's lack of creativity, as a "new" title to them rarely gets more radical than, say, reinventing "The Godfather" as a videogame, their unequaled sports franchise is a cash machine that has rabid fans re-upping every year for the next Madden, the next NBA game, the new college football version for the new season, etc. This company has lots of cash, no debt, very strong competitive positions, as resources to grow properly for the next decade plus. It's not the dynamic growth stock it once was, now at a market cap of $16.5 billion, but I think ERTS is a near sure bet to beat the market averages over the next decade.

"Spore" will be a new release to watch later this year, from Will Wright, creator of the Sims games.

While I believe EA will do well going into the XMAS season, their hold on the Madden franchise and the Lord of the Rings games gives them an exclusive on an already "hungry" fan base well into the future. Gaming is on the rise, and they are at the forefront... what's not to like?

Electronic Arts has been one of the leading game developer and publisher, with biggest selling PC game - the SIMS series - having sold over 24 million copies to its credit. The market for the company is divided into four segments i.e. video games (consoles), PC’s, online and mobile or hand held. The console games are the biggest revenue earners for the company, generating over 65% of their total revenues, in which PS2 games contributes major chunk.

The long term outlook of the industry looks promising, with next generation consoles like Play Station 3 and Nintendo Wii due for launch in this quarter. Industry is set to grow to 126 million consumers, who will spend $8.3 billion by 2008 according to Yankee research group. EA being the major player will surely benefit from the growing market.

EA has been a highly research driven entity with research and development centers across the globe; it aims at achieving local as well as international “hit” titles. Currently new titles like Madden, NFL 07 and FIFA 07 are driving the company’s growth. Further by acquisition of JAMDAT in February 2006, the company has increased its focus on mobile game segment with formation of EA Mobile.

The Company’s online gaming market also looks attractive with broadband penetration in US household market expected to reach 50% by Jan 2007. Though this segment contributes marginally to over all revenues, it is certain to impel growth in the future.

A positive industry outlook, and expected higher margins, due to premium pricing in the initial phase of next generation games, the company looks set for a prolific present quarter. The cyclic nature of gaming industry, spawning highest revenue in December ending quarter, due to holiday shopping also makes the present quarter very promising.

I saw the lines for Madden going around the block last week. 'Nuf said, EA will dominate the video game market going forward. And I used to break the backboard all the time in my first EA game.

Gaming, a cyclical industry, is at a low point. It should robustly return to intrinsic value over the next year or so, given the new gaming platforms and the ones to come. ATVI is also a definite undervalued colleague.

Games are becoming more sophisticated every year. They are becoming interactive movies. ERTS is the premier game producer. This stock has been beaten down recently due to game console transitions. It will rebound.

Entertainment is one thing that, believe it or not, tends to hold up pretty damn well in recessions. Hollywood in the 1930s was booming. Video games today are what movies were in the 1930s. Electronic Arts is the #2 independent videogame company (#1 is ATVI), and with stellar perennial winners like Tiger Woods PGA, Madden NFL Football, along with a solid lineup of shooter, online, console, and computer games, should continue to be profitable. Will Wright's recent game Spore is an EA game - maybe you've heard of it. And if anyone out there who is reading this works for EA, tell them to make a next gen SSX game already okay?

These guys are the best at what they do.

---------------------------------------------------------------
Talks with Apple already underway

Mitch Lasky, senior vice president of Electronic Arts Mobile, has revealed that the company is currently in negotiations to produce games for the new Apple iPhone.

The device was first unveiled at Macworld Expo last month, with Apple boss Steve Jobs predicting that it will "revolutionise" the mobile industry.

Measuring 11.6mm thick, the iPhone comes with a built-in 2-megapixel camera and can be used to download music and videos.

So far little has been revealed of any potential gaming capabilities, but at least one publisher is keen to get involved - EA has already produced five games for the iPod and now looks set to offer support for Apple's next product.

Speaking to Business Week, Lasky said, "We have been talking to Apple about games on [the iPhone].

"We see a lot of the technology that we've utilised on the iPod side being incorporated into the iPhone."

Lasky became president of EA Mobile last year when the company acquired Jamdat, where he was previously CEO. EA Mobile sales during 2006 totalled US$ 118 million (EUR 91 million) - accounting for 4 per cent of the publisher's overall revenue.

Other companies likely to take an interest in the iPhone's gaming capabilities include PopCap Games, which already produces casual titles for the iPod plus the web and Xbox 360.

This is a tough call short-term since the stock has rebounded 30% in recent months and the next-generation consoles aren't out yet. Long term, though, the video gaming will continue to gain share in the entertainment industry.

I must have purchased around 50 video games from EA in my 30 years of life, and I'm hardly an avid gamer. With the penetration of XBOX, PS, Wii, still not being enough for them to be positive, you have to ask yourself how much growth potential does this company have?

There is something fundamentally wrong with the way giant video game companies are run and there is no indication that anything good is on the horizon. Although they could get bought by a giant conglomerate.

50 is my buying price. The new-gen consoles are catching on, and the higher prices means more dough for EA. People don't realize how Madden actually moves this industry. And with Madden's upgrade this year it will sell big once again. But not only that it will actually move gamers to buy the XBOX and PS3 and away from Wii. They have lost ground in recent years for lack of innovation, but the sleeping giant has awoken.

EA sports owns the rights to the best sports games and users renew almost automatically. Games are not going away, neither is EA sports. Game stocks are down waiting for new consols, these are coming so this is the "buy low" area that you'll want when 12 months for now its up 20% and then you decide to get in higher. Buy low, buy now.

There are concerns about their ability to make original new games, but they have the "systems" and cash in place to buy and bring other games to market better. Its not MSFT, but same idea.

I'm in this with Real $$$. Holding for 10+ years and will beat the market.

Enjoy your games and get paid for it!

ERTS is the global leader in a market that is nowhere near mature. While creativity has probably not been its strong suit (sports and movie franchises have their fans, but they're not exactly mind-blowingly imaginative), the company has recognized the problem and is focusing on developing innovative, new game franchises. Don't know about you, but I can't wait to get my hands on Spore! The current console transition is the perfect opportunity to accumulate shares of this industry leader. Stick with ERTS through the transition, and you will be glad that you did.

Industry leader in terms of quality titles in high demand. Electronic Arts has been one of the strongest publishers for years now, and they continue to aquire successful, quality franchises.

New Platforms, demographics are compelling and stock has not repsonded to XB360, Wii or PS3 yet due to price of consoles. It is inevitable that prices will decrease, thus increasing game console sales and Game sales

Electronic Arts, Inc. provides some of the most popular video games in the industry, particularly in the sports genre. I am not personally a gamer, but many of my friends are, and all I here them talking about is "Madden this" and "Madden that." So, I bought into into about six to eight months back and I've done quite well.

X-Box,Wii and Nintendo spell the beginning of the new video game cycle. The best and largest of the game developers is ERTS. If you are patient ughtthere can only be money in the bank by holding ERTS. The only other question might be do I also buy GME and Best Buy, so you win no matter what games are bo

EA games is a great gaming company. So far they have created great sports and shooting games. With the new era in video game systems (Xbox-360, WII and PS3) EA will have plenty of room to grow. iI see the stock reaching $100 with in the next 2 years.

EA develops cheap, buggy, unfinished games and sells them to an undiscerning market; that market may be wiser this christmas season with tight belts around so many families.