Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Electronic Arts -- Ignore unavailable to you. Want to Upgrade?

To: Bob Hawk who wrote (301)	4/7/2000 2:59:00 PM
From: Grandk	Read Replies (2) \| Respond to of 415

Midway, Activision Shares Blasted By Dave Marino-Nachison (TMF Braden) April 7, 2000 Though I did my part to boost the flagging video-game industry earlier this week, picking up a copy of Squaresoft's "Final Fantasy Anthology" on deep discount, it doesn't seem to be helping. The parade of sales warnings from game manufacturers continued apace today, Midway (NYSE: MWY) and Activision (Nasdaq: ATVI) forecasting downbeat financials. Into the press releases: Midway instructed investors to expect net losses in the second half of 2000, while Activision said revenues and earnings for fiscal 2001 (their year ended in March) to be flat with 2000 figures. Activision, maker of the Quake violent mayhem series, will restructure, cutting jobs and paring product lines. Predictably, both companies' shares were beaten up this morning. Midway, which makes games for the home and the arcade such as NFL Blitz, NBA Showtime, and Gauntlet Legends, attributes its disappointing sales to a familiar bugaboo: By the upcoming holiday season and early 2001, Sony (NYSE: SNE) is expected to release its next-generation PlayStation game console, followed by Nintendo's Dolphin. Also in the mix is Microsoft's (Nasdaq: MSFT) mysterious "X-Box" project. Companies across the board have bemoaned the short-term weakness. Here's a link to a recent column on Tomb Raider pimp Eidos (Nasdaq: EIDSY) , and another to a 12-month chart detailing the rough recent fortunes of Eidos, Activision, Midway, Acclaim (Nasdaq: AKLM) , and Electronic Arts (Nasdaq: ERTS) . (Disclaimer: I own shares of Electronic Arts). Naturally each of those companies are driven by different dynamics, but the sympathy in which the industry's leaders trade is notable. And though a little skepticism of corporate excuses is always wise -- particularly when they all drag out the same scapegoat to explain away bad news -- in this case the complaints seem legitimate. Even Sega, which hoped its Dreamcast console would help revitalize its once-admirable position in the world's dens and teenage bedrooms, now has to wait for news from "The Big Two." Dreamcast announcements these days are pretty glum, with hardware sales sliding, the company offering free systems to U.S. users who sign up for its Internet service, and some software developers planning to hold back on making games for the system in favor of the more powerful duo on the way. Activision, for its part, is cutting certain product lines it can't market to Internet users or next-generation platform buyers. Preparing for new platform launches is no small task: The planning process is labor-intensive and can take years as developers work to create the best ways to harness improving hardware. (For more insight on that, look at this June StockTalk interview with Acclaim's head honcho.) But long-term investors shouldn't worry about the long-term potential for growth in this industry -- on the software side, at least. Video game consoles have literally revolutionized the way people socialize and entertain themselves, and with Microsoft's entry into the fray, many are even forecasting the waning of the PC's place in the gaming universe. And with software stocks beaten down amid worries of near-term demand, investors looking for bargains in the sector should consider shopping around long before the new systems start coming out. fool.com