Industry analysts claim investors are unhappy with EA management
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.