[Briefing.com]
Electronic Arts (ERTS) 44 3/8 -6 1/2: Along with Sony (SNE 102 3/4 -6 1/4), ERTS shares are getting hammered today on rumors that there will be a delay of Sony's PlayStation 2 launch. Electronic Arts makes interactive software (games) for the PlayStation, and is eagerly anticipating the launch of the new version to jump start sales. Now there is noise circulating on trading floors that the much anticipated PlayStation 2 launch will be delayed. We cannot confirm nor deny these rumors as Sony has not said anything, but they are definitely what is moving ERTS today, so let's take a look at just how important PlayStation sales are to ERTS. In their last fiscal quarter ending in June, ERTS recorded total sales of $154.8 mln with PlayStation 2 accounting for $10.3 mln, or about 6.7%. PlayStation (original version) accounted for $29.5 mln, or 19.1%, bringing the total PlayStation percentage of sales up to a substantial 25.7%. ERTS reported that in Q2, Japan sales rose 257% y/y due primarily to the launch of their first PlayStation 2 title (FIFA Soccer World Championship). If that jump in Japan sales from $5.3 mln to $19.0 mln is any indication, this PlayStation 2 launch could be a major sales catalyst. In anticipation, traders and investors alike have driven up ERTS shares about 34% over the past three months. Until today that is. The PlayStation 2 launch is expected to take place Oct. 26, and many of ERTS' most popular titles are expected to see a major pickup in sales as a result. We're not saying ERTS is only a one trick pony, their online subscription games are growing sales at over 145% y/y and PC sales are still the company's bread and butter, accounting for almost half of total sales. However, this PlayStation 2 launch is expected to be big for ERTS, and to a certain extent, has already been priced in to the shares. Should Sony delay the launch for whatever reason, ERTS is exposed to further downside. |
