As I said in my last write-up of Disney (NYSE:DIS),
there's an element of predictable unpredictability to this company and
that came through again this quarter. Like so many other
consumer-oriented stocks, though, Disney has been on an absolute tear –
more than doubling the performance of the S&P 500 over the past
year. While I wouldn't worry about that if I were a long-term holder of
Disney (and still planning on being one), valuation is making it appear
as though there's a housing bubble for the House of the Mouse.
Please continue here:
http://www.investopedia.com/stock-analysis/050813/disney-does-it-again-dis-ccl-cmcsa-fun-ea-six.aspx
Showing posts with label Electronic Arts. Show all posts
Showing posts with label Electronic Arts. Show all posts
Wednesday, May 8, 2013
Friday, May 25, 2012
Investopedia: Take-Two More Like A Big Game Call Option Than A Real Company
There's no such thing as a perfect way to value any company, but cash flow analysis has long suggested that Take-Two Interactive (Nasdaq:TTWO)
isn't worth an investor's long-term attention. The stock's performance
over the past five years has backed that up, though it's worth noting
that Electronic Arts (NYSE:EA) has fared no better (meaningfully worse, actually) and there have been repeated trading opportunities.
With a continued pattern of poor earnings outside of blockbuster launches and delays in bringing major titles to market, it looks like little is going to change. Take-Two can be an interesting trading vehicle to play big-name title launches, but it doesn't look like management has the ability to make this company a consistent generator of free cash flow.
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With a continued pattern of poor earnings outside of blockbuster launches and delays in bringing major titles to market, it looks like little is going to change. Take-Two can be an interesting trading vehicle to play big-name title launches, but it doesn't look like management has the ability to make this company a consistent generator of free cash flow.
Please follow this link:
http://stocks.investopedia.
Thursday, March 1, 2012
Investopedia: Balancing Skepticism And Opportunity On GameStop
I have not been shy about my lack of faith in the durability of GameStop's (NYSE:GME) business model. That said, one of the worst mistakes any investor can make is to just past judgment on a company, assume you will always be right and never re-examine the story or your own assumptions. When I look at GameStop, I still see a lot of problems, but I also see how the stock may well be something of a value today.
Rehashing the Old
My original (mostly negative) thesis on GameStop ran something like this. Used game sales are a major component (more than 40%) of gross profit and the ongoing expansion of digital distribution by Electronic Arts (Nasdaq:EA), Activision Blizzard (Nasdaq:ATVI) and Take Two (Nasdaq:TTWO) should shrink that pipeline. Moreover, it wouldn't shock me to see a company like Best Buy (NYSE:BBY) at least entertain the idea of competing in that space, in an attempt to drive store traffic.
Read more here: http://stocks.investopedia.
Wednesday, August 24, 2011
Investopedia: Digital May Not Solve GameStop's Biggest Problem
There is plenty of discussion these days about whether leading video game retailer GameStop (NYSE:GME) is doomed to follow a Blockbuster-like path to irrelevance and/or whether would-be rivals like Netflix (Nasdaq:NFLX) and Coinstar (Nasdaq:CSTR) can get into its kitchen. Unfortunately for GameStop bulls, there are some real reasons for concern. (For other companies that are threatened by strong competition and a changing market, check out Companies Playing Catch-Up With The Competition.)
Digital Isn't Everything
A recent article on TheStreet.com tried to point toward growing digital sales as a sign that GameStop is adapting with the times and capable of staying competitive. To be fair, online revenue is growing nicely - up 69% in the recently-announced second quarter - while overall revenue dropped 3%. Unfortunately, there's more to the GameStop story than that.
Read more at the link below:
http://stocks.investopedia.
Digital Isn't Everything
A recent article on TheStreet.com tried to point toward growing digital sales as a sign that GameStop is adapting with the times and capable of staying competitive. To be fair, online revenue is growing nicely - up 69% in the recently-announced second quarter - while overall revenue dropped 3%. Unfortunately, there's more to the GameStop story than that.
Read more at the link below:
http://stocks.investopedia.
Wednesday, July 13, 2011
Investopedia: Will Social Gaming Keep Electronic Arts Relevant?
The fad of the day is social and mobile gaming, and investors are more than a little fired up over the upcoming IPO of Zynga. While some people dread seeing notifications from games their friends are playing on platforms like Facebook, others cannot get enough of them and buy smartphones and tablets, in part on their ability to support gaming. Not wanting to get left behind, Electronic Arts (Nasdaq:ERTS) is making a major financial commitment to becoming a player in this space.
The Latest Deal
Electronic Arts announced Tuesday night that it would acquire PopCap Games, publisher of games like Plants vs. Zombies and Bejeweled, in a cash-and-stock deal. Electronic Arts will be paying $650 million in cash and $100 million in stock up front for the privately held Seattle-based game company. But scaled earn-outs could push the total deal price north of $1.3 billion if PopCap delivers cumulative two-year operating income of over $343 million.
Any way you slice it, this is a rich valuation on the fundamentals. PopCap does boast over 150 million installed games, but it produced about $100 million in revenue last year (though reportedly with a growth rate in the vicinity of 40%). To the extent that traditional game publishers like Electronic Arts, Activision Blizzard (Nasdaq:ATVI) or Take-Two (Nasdaq:TTWO) are comparables, the 7.5 times trailing sales that Electronic Arts is paying (just based upon upfront consideration) is about triple the going rate.
To read the full piece, click below:
http://stocks.investopedia.
The Latest Deal
Electronic Arts announced Tuesday night that it would acquire PopCap Games, publisher of games like Plants vs. Zombies and Bejeweled, in a cash-and-stock deal. Electronic Arts will be paying $650 million in cash and $100 million in stock up front for the privately held Seattle-based game company. But scaled earn-outs could push the total deal price north of $1.3 billion if PopCap delivers cumulative two-year operating income of over $343 million.
Any way you slice it, this is a rich valuation on the fundamentals. PopCap does boast over 150 million installed games, but it produced about $100 million in revenue last year (though reportedly with a growth rate in the vicinity of 40%). To the extent that traditional game publishers like Electronic Arts, Activision Blizzard (Nasdaq:ATVI) or Take-Two (Nasdaq:TTWO) are comparables, the 7.5 times trailing sales that Electronic Arts is paying (just based upon upfront consideration) is about triple the going rate.
To read the full piece, click below:
http://stocks.investopedia.
Tuesday, May 31, 2011
Investopedia: Take-Two Still Offering Twists And Turns
Volatility can be both boon and bane to investors. Traders certainly love it, and savvy value investors learn to appreciate it for the discounts it can create. On the other hand, volatility based on inconstant underlying financial performance makes valuation more difficult and does no favors to the mental health of those who would prefer to be long-term shareholders.
For better or worse, Take-Two Interactive (Nasdaq:TTWO) continues to be a volatile company. While the company has certainly made progress towards more consistent financial performance, progress towards a goal is not the same as achieving that goal. Take-Two may still offer investors the potential for above-average capital gains, but prospective buyers have to ask themselves if they can handle the uncertainty that will go with the possible profits.
A Sweet and Sour End to the Fiscal Year
Take-Two recently decided to change its fiscal year, and the March quarter now represents the end of the company's fiscal year. For the quarter, Take-Two announced that revenue fell 22% to $182 million. Though that certainly does not sound all that impressive, that $182 million is considerably more than analysts expected, as the averaged estimate called for $148 million and the high-end estimate was $170 million. Sales were not driven by any major releases; rather, the company's revenue came from its catalog. To that end, this is an encouraging sign - if the legacy business can produce better revenue, that's a big step towards a more consistent financial performance. (For more, see Power Up Your Portfolio With Video Game Stocks.)
Continue to the full piece at Investopedia:
http://stocks.investopedia.
For better or worse, Take-Two Interactive (Nasdaq:TTWO) continues to be a volatile company. While the company has certainly made progress towards more consistent financial performance, progress towards a goal is not the same as achieving that goal. Take-Two may still offer investors the potential for above-average capital gains, but prospective buyers have to ask themselves if they can handle the uncertainty that will go with the possible profits.
A Sweet and Sour End to the Fiscal Year
Take-Two recently decided to change its fiscal year, and the March quarter now represents the end of the company's fiscal year. For the quarter, Take-Two announced that revenue fell 22% to $182 million. Though that certainly does not sound all that impressive, that $182 million is considerably more than analysts expected, as the averaged estimate called for $148 million and the high-end estimate was $170 million. Sales were not driven by any major releases; rather, the company's revenue came from its catalog. To that end, this is an encouraging sign - if the legacy business can produce better revenue, that's a big step towards a more consistent financial performance. (For more, see Power Up Your Portfolio With Video Game Stocks.)
Continue to the full piece at Investopedia:
http://stocks.investopedia.
Tuesday, May 10, 2011
Investopedia: Electronic Arts - From Growth To Turnaround ... To Value?
What a long, strange trip it has been for Electronic Arts (Nasdaq:ERTS). This leading video game software company was once a go-go growth stock, with a valuation that virtually required double-digit cash flow growth ad infinitum.
Perhaps not so surprisingly in a competitive marketplace, that growth didn't show up. That sent the financials and valuations to a very dark place, and the stock sold for about one-fourth its peak value. Now, though, the company seems to have turned the ship around. But the question still remains whether Electronic Arts has enough of a moat to be an appealing value-oriented stock.
Fourth-Quarter Results Show Some Progress
Electronic Arts certainly delivered the goods for the fiscal fourth quarter. Revenue (on a GAAP basis) climbed 11%, handily surpassing even the high-end estimate by over 10%. The mix of the revenue is fairly interesting. Growth in North America was just 4%, while European sales jumped 21%. Digital revenue rose 72% (to nearly one-quarter of the total). Within all of that, products for the PC dropped 4%, mobile/handheld was flat, and console sales were up 20%.
Read the full piece at the link below:
http://stocks.investopedia.
Perhaps not so surprisingly in a competitive marketplace, that growth didn't show up. That sent the financials and valuations to a very dark place, and the stock sold for about one-fourth its peak value. Now, though, the company seems to have turned the ship around. But the question still remains whether Electronic Arts has enough of a moat to be an appealing value-oriented stock.
Fourth-Quarter Results Show Some Progress
Electronic Arts certainly delivered the goods for the fiscal fourth quarter. Revenue (on a GAAP basis) climbed 11%, handily surpassing even the high-end estimate by over 10%. The mix of the revenue is fairly interesting. Growth in North America was just 4%, while European sales jumped 21%. Digital revenue rose 72% (to nearly one-quarter of the total). Within all of that, products for the PC dropped 4%, mobile/handheld was flat, and console sales were up 20%.
Read the full piece at the link below:
http://stocks.investopedia.
Monday, December 20, 2010
Has Take-Two Found A New Path?
For quite some time it has been easy to figure out how Take-Two Interactive Software (Nasdaq:TTWO) would do in a given year. All an investor had to do was check and see if there would be a release in the Grand Theft Auto franchise; if so, assume profits, and if not, assume losses. That sort of reliance on a single brand is seldom good news for a company, and it has been no exception for Take-Two. The question raised by this fiscal year, though, is whether the old truths about Take-Two may need some reexamination and reconsideration.
A Surprisingly Good Quarter
Take-Two closed out its fiscal year with something of a bang. Revenue rose 32% to $374 million - handily beating both the average estimate of $325 million and the high-water mark for the quarter of $362 million. Growth was actually pretty well balanced this quarter, as Red Dead Redemption and NBA 2K11 made up for the absence of a new GTA release, and the company's catalog delivered solid performance.
Profitability was also much better this time around. Operating profits exceeded $59 million this quarter, which is a far better result than last year's $3 million. Not surprisingly, the company handily beat analyst earnings expectations. Interestingly, this was not only the first year in more than a decade where the company was profitable without a new GTA title, this period also marked profitability for the 2K Sports franchise.
Please follow the link for the full piece:
http://stocks.investopedia.
A Surprisingly Good Quarter
Take-Two closed out its fiscal year with something of a bang. Revenue rose 32% to $374 million - handily beating both the average estimate of $325 million and the high-water mark for the quarter of $362 million. Growth was actually pretty well balanced this quarter, as Red Dead Redemption and NBA 2K11 made up for the absence of a new GTA release, and the company's catalog delivered solid performance.
Profitability was also much better this time around. Operating profits exceeded $59 million this quarter, which is a far better result than last year's $3 million. Not surprisingly, the company handily beat analyst earnings expectations. Interestingly, this was not only the first year in more than a decade where the company was profitable without a new GTA title, this period also marked profitability for the 2K Sports franchise.
Please follow the link for the full piece:
http://stocks.investopedia.
Wednesday, October 27, 2010
No Damming Digital River
Nothing irks value investors like an expensive stock that stays expensive and more or less delivers the performance investors want. E-commerce specialist Digital River (Nasdaq: DRIV) is a good example. The stock has rarely been cheap, but the company continues to separate itself from would-be rivals and seems to have a way of bouncing back from setbacks.
The Quarter That Was
Digital River announced that revenue fell 14% in the third quarter, due mostly to the loss of Symantec (Nasdaq:SYMC) as a customer. The company has done a great job of scrambling to replace that loss, though. Revenue excluding Symantec would have been up more than 20% over last year, due in part to the expansion of the company's relationship with other software companies like Microsoft (Nasdaq:MSFT) and Electronic Arts (Nasdaq:ERTS).
Profitability was a bit more problematic, however. The company made scant progress in trimming down expenses in sync with revenue, and Digital River saw total operating expenses fall only a bit more than $2 million. Consequently operating income fell precipitously, though the company's adjusted earnings were fine relative to Wall Street expectations.
Please click the link below to continue:
http://stocks.investopedia.
The Quarter That Was
Digital River announced that revenue fell 14% in the third quarter, due mostly to the loss of Symantec (Nasdaq:SYMC) as a customer. The company has done a great job of scrambling to replace that loss, though. Revenue excluding Symantec would have been up more than 20% over last year, due in part to the expansion of the company's relationship with other software companies like Microsoft (Nasdaq:MSFT) and Electronic Arts (Nasdaq:ERTS).
Profitability was a bit more problematic, however. The company made scant progress in trimming down expenses in sync with revenue, and Digital River saw total operating expenses fall only a bit more than $2 million. Consequently operating income fell precipitously, though the company's adjusted earnings were fine relative to Wall Street expectations.
Please click the link below to continue:
http://stocks.investopedia.
Thursday, September 9, 2010
4 Companies That Should Have Sold Out
Mergers and buyouts are part and parcel of the investing experience. While a buyout bid can give a nice return to a short-term investor, longer-term investors often fret that a bid may entice management to sell a company for less than its true long-term value. What is also true, though, is that sometimes managers are unreasonably and unproductively stubborn - refusing to hand over the reins (and their large executive salaries) and allow shareholders to book a profit or own shares in a larger enterprise. (For related reading, take a look at Mergers: The Sign Of Economic Recovery?)
With news swirling around 3Par's (NYSE:PAR) willingness to sell to either Dell (Nasdaq:DELL) or Hewlett-Packard (NYSE:HPQ), there is the sharp contrast of Genzyme's (Nasdaq:GENZ) resistance to a bid from Sanofi-aventis. Let us take a look at examples where shareholders really would have been better-served if their managers had signed on the dotted line and taken the deal. (Find out how you can cash in, read Trade Takeover Stocks With Merger Arbitrage.)
To read the complete column, please click on the link:
http://stocks.investopedia.com/stock-analysis/2010/4-Companies-That-Should-Have-Sold-Out-PAR-DELL-HPQ-GENZ-MSFT-YHOO-ERTS-TTWO-UTX-DBD-CPWM-PIR0909.aspx
With news swirling around 3Par's (NYSE:PAR) willingness to sell to either Dell (Nasdaq:DELL) or Hewlett-Packard (NYSE:HPQ), there is the sharp contrast of Genzyme's (Nasdaq:GENZ) resistance to a bid from Sanofi-aventis. Let us take a look at examples where shareholders really would have been better-served if their managers had signed on the dotted line and taken the deal. (Find out how you can cash in, read Trade Takeover Stocks With Merger Arbitrage.)
To read the complete column, please click on the link:
http://stocks.investopedia.com/stock-analysis/2010/4-Companies-That-Should-Have-Sold-Out-PAR-DELL-HPQ-GENZ-MSFT-YHOO-ERTS-TTWO-UTX-DBD-CPWM-PIR0909.aspx
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