Electronic Arts Inc. (NASDAQ: ERTS) is set to report earnings after the close of trading today.  The (former) largest US-based video game company is expected to post $0.91 non-GAAP EPS on $1.92 billion in revenue.

The company’s coming quarter is expected to see $0.21 non-GAAP EPS and$1.04 billion in revenue, and that will also mark the end of its fiscal 2009 period.  We think that the video game giant will joinothers in the quest of limiting guidance so it is not sticking its neckout too far when peers are not. 

The March 2009 estimates are $0.65 EPS and $4.69 billion, but theestimates for 2010 (March-2010) are $1.18 EPS on $4.73 billion inrevenue.  The reason we show this is that we feel the company willtalk those farther out on the curve targets lower even if it does notgive expanded or detailed targets. 

We have already been given much lower guidance on more than one occasion by the company.  Rival and former "failed takeover" target Take-Two Interactive Software Inc. (NASDAQ: TTWO) also warned.

Activision Blizzard, Inc. (NASDAQ: ATVI), THQ Inc. (NASDAQ: THQI), andeven GameStop Corp. (NYSE: GME) could all have further reactionsdepending upon how this report goes today.

We think that the bad news is just about fully into these stocks withEA shares having again put in 52-week lows today.  The companies in thegroup have warned and warned on revenues and earnings.  This sector wassupposed to be one of the beneficiaries of the shut-in or newly turnedcouch potato economy.  But so far nothing has been safe and nowhere issacred in the economy.

Jon C. Ogg
February 3, 2009

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