Photo Credit: Mobil Yaşam

Electronic Arts Inc. (EA) Information Technology - Software | Reports November 1, After Market Closes 

Video game publisher, Electronic Arts, is prepared to announce its fiscal second quarter results tomorrow afternoon. EA started its fiscal 2017 on quite a sour note, delivering sharp declines on both the top and bottom line. Expectations for the upcoming quarter are equally as muted due to weak seasonality trends. Shares are trading lower the past month leading into its report tomorrow

Analysts at Estimize are calling for earnings per share of 42 cents, 31% lower than the same period last year. That projection has dropped 30% in the past 3 months when EA last reported. Revenue is estimated to drop 5% during the quarter to $1.08 billion, marking the second consecutive quarter of negative growth. Typically, shares tend to rise through the print but given the current downtrend, investors shouldn’t be banking on making any gains. 

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Electronic Arts started the year on a hot streak thanks to the overwhelming success of Star Wars: Battlefront. That has since cooled off and Electronic Arts are coming off a weaker than expected FQ1 2017 printing a 53% decline on the bottom line and 2% on the top. The second quarter, unfortunately, doesn’t fully cover the annual release of FIFA and Madden video games. These games are often two of  highest grossing games year after year and typically carry quarterly results, but investors will have to wait until the third quarter

Meanwhile, smartphone owners can expect to see new versions of FIFA, Madden, and even a Star Wars based game. This is a new fact that Electronic Arts had previously never recognized but is now a huge source of revenue. The biggest factor, however, is growth in digital sales and in-game purchases. This new wave of digital offerings are not only convenient they also generate the highest margins. If Electronic Arts can continue to see strong growth in digital offerings then expect to see more favorable price movement.

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Do you think EA can beat estimates?