Sections

Industry analysts claim investors are unhappy with EA management

Thursday, 14th January 2010 17:29 GMT By Stephany Nunneley

johnriccitiello2

EA’s forecast for FY10 revealed this week has been met with disappointment from investors, according to industry and investment analysts who feel that something “drastic” has to happen to turn things around for EA.

This lack of investor confidence has put CEO John Riccitiello in an unenviable position, causing Janco Partners analyst Mike Hickey to state that Riccitiello’s “inability to execute on his performance objectives this year could put him at risk”.

“Anytime you underperform, you should be worried about your job,” Hickey told Reuters (via CVG), and fellow industry analyst, Michael Pachter, agrees.

“Investors feel betrayed, and the comment I got most from investors today is ‘They don’t seem to care about investors’”, he said. “This management team is running out of room to underperform. I think investor tolerance is gone … they don’t get another year to turn around.”

EA’s shares rose a lackluster 2.7 percent in the last year, while rivals Activision, Take-Two and THQ have seen greater increases.

“For a $4 billion-plus company, that just isn’t acceptable,” said Arvind Bhatia of Sterne, Agee & Leach. “Something is going to happen here — drastic costs cuts or them buying someone or getting sold — something has got to give in the next 12 to 18 months.”

Even previous EA executives like Mitch Lasky are aghast over the current situation within the company, which prompted Lasky to lash out at the current management on his blog.

“It’s… amazing that the board continues to support the existing management team through this debacle,” said Lasky. “Since JR took over, the company has destroyed over $11 billion in market value. Certainly, some of that was the economy and the general erosion of value on NASDAQ, but Activision… has experienced far milder effects from the recession.”

On the brighter side, Pachter feels that EA’s March and June quarters could “save” the company, stating that EA’s upcoming lineup “is going to save them.”

Medal of Honor, and EA Sports’ MMA and Madden are heavyweights expected during 2010, but with Dead Space 2, Criterion’s Need for Speed, and Crysis 2 yet to receive any sort of release estimate, lack of investor confidence could continue.

To help turn the tide, EA has said that it will produce fewer games this year, and what is released will be nothing but quality.

Hopefully, the “less is more” mantra will work out well for EA.

Breaking news

18 Comments

Sign in to post a comment.

  1. Doc Robotnik

    There should be a petition to save JR – he’s been the best thing to happen to EA in… probably ever.

    If someone does start the petition and it becomes popular, I’m claiming credit :p

    #1 5 years ago
  2. abbe

    Doc Robotnik:
    Thank you for writing that so I don’t have to.
    Its a bloody shame EA have had such bad years lately since JR took the top-dog spot, its been the best games they have released in a long time.

    #2 5 years ago
  3. The1stMJC

    Figures EA starts to become a likable company again and the investors are not happy with the amount of profit. I hope EA doesn’t change right now image if we had evil EA back with an even eviler Activision god help us

    #3 5 years ago
  4. Doc Robotnik

    The problem is that likeable doesn’t always sell.

    People rave about Dead Space, but it didn’t sell well – people just didn’t buy it (brand new). Mirror’s Edge was a risk, but didn’t pay off.

    People have to vote with their wallet and, perhaps sadly, that wallet is Activision’s at the moment, not EA’s.

    #4 5 years ago
  5. Gheritt White

    …and it’s for this very reason I’ve pre-ordered Dante’s Inferno.

    #5 5 years ago
  6. AHA-Lambda

    I feel really bad for EA now. They FINALLY make GREAT games and nobody buys them anymore. What the hell?

    People if you don’t buy crysis 2, medal of honor, bad company 2, dead space 2 etc. then they’ll return to their activision esque ways!!

    #6 5 years ago
  7. NoxNoctisUmbra

    Good thing Im skipping Dante Inforno.. I never knew I would say that, but this will be my first time I will buy or not buy a game based on a developer. SO EA is out of my book … ok untill BFBC2 an BF3 comes out ;)

    #7 5 years ago
  8. onlineatron

    EA need to stay the course.

    There is only so much regurgitated crap (Activision) people can handle before they start pining for something different.

    If EA continue to build great games and garner a likeable expectation then BAM! They’ll be there to pick up the pieces.

    Or at least that’s how it works in my mind of rainbows and kittens.

    #8 5 years ago
  9. RomaTotti10

    Funny the article doesn’t mention Dante’s Inferno as one of EA’s big titles for 2010.

    #9 5 years ago
  10. OlderGamer

    Change the way EA sport games work. No one likes 60usd for updated versions of laster years game. They didn’t even do a Nascar game this last year. W/O doing a lot fo research I would guess that EA sports makes up a large portion of the yearly revenue for EA. Figure out a different bizz model there.

    And NO, investors, we do NOT need a yearly version of Battlefield. With CoD hitting the shelfs so frequently, you know they are thinking it. And that really is the sadest part, you know investors that want more(and that is it really, they are greedy and want MORE) will be eyeing the way Activision is cranking out games and want to mimic that.

    If everyone did that I may very well walk away. An oversaturated “Me too” games market isn’t much fun.

    #10 5 years ago
  11. Stephany Nunneley

    @9 Nor Mass Effect 2 for that matter, because both are a given.

    #11 5 years ago
  12. Hunam

    To be perfectly honest, why the fuck should investor care about ANYTHING else other than profit? They are not gamers, they are business men. They put money in, they want money out. That’s it. Not making money is bad business. No matter how much I like EA now and the games they make (Dead Space and Mirror’s Edge are personal favourites, as are Battlefield games) they are failing the people who give them money by not making it for them as they said they would.

    #12 5 years ago
  13. Psychotext

    Hunam speaks the truth. Even as a gamer I couldn’t give a crap if a company I’ve invested in is making good games… as long as they’re making games that rake in the cash.

    #13 5 years ago
  14. Grimrita

    Well the man has made the tough decisions and should be given more time to see it through to the end. But then again, only a pratt would pay over $2 million for Peter Moore!

    #14 5 years ago
  15. Gekidami

    Whilst EA games did get better under Riccitiello the stupid crap he’s been pushing lately (pretty much releasing games in bits & pieces making people pay more in the end along with his plan to charge for browser based games that are currently free) is unacceptable.

    #15 5 years ago
  16. rainer

    The best thing that could happen is a few more disasters for Activision other than WoW and CoD which are unfortunately huge money makers they have pretty much run everything else into the ground but investors dont care and just want EA to be the same.

    Fingers crossed EA have a few more big hits to keep the investors and asshole industry analysts at bay.

    #16 5 years ago
  17. bluemanrule

    Give it time. With Mass Effect 2, Battlefield: BC 2, Dead Space 2, Army of Two 2, Dragon Age Expansions, DLC for all its titles, EA simply needs conservative estimates for this Fiscal Year to make investors happy. EA will bring in some serious revenue. Besides, I think EA will run the field in 2010. Ubisoft can’t seem to get it together.

    #17 5 years ago
  18. Hunam

    rainer, I’m glad you mentioned WoW because that’s the crux of it for Activison, they make so much money of that game alone that they can make fewer games that cost more (Hero games/CoD) than having a new game out every month. I honestly think that EA could have had a big hit with Warhammer Online, but they didn’t support the game and exepected to see a million players day one. They didn’t have the patience or skill to let the game grow and mature naturally so just relegated it to a barely thought of project.

    #18 5 years ago