Electronic Arts Rises After CEO Says Growth Is Ahead
Stock Chart for Electronic Arts Inc (EA)
Electronic Arts Inc. (EA), the second- largest video-game publisher, rose the most in more than five months after Chief Executive Officer John Riccitiello suggested investors are overlooking the company’s growth potential.
The shares rose 7 percent to $12.30 at 3:35 p.m. in New York and earlier gained 7.5 percent, the biggest intraday jump since Feb. 2. Redwood City, California-based Electronic Arts had fallen about 44 percent this year through yesterday.
Riccitiello this week reiterated his concerns that investors have shied away from video-game makers because they don’t fully grasp the industry’s growth potential. Analysts and investors who focus on games sold at retail are overlooking Electronic Arts’ growing dominance in games sold digitally, he said. Games sold at retail outlets have fallen for almost two years, according to researcher NPD Group.
“The external world wants to see you five years ago, the way you were, and the only proof-point they’re willing to look for is sort of what happened yesterday,” Riccitiello said on July 17 at the Fortune Brainstorm technology conference in Aspen, Colorado.
The company’s sales of games sold on Facebook Inc.’s social network, mobile and other platforms will grow to $1.7 billion this year from $1.2 billion last year and from nothing a few years ago, Riccitiello said. A year ago Electronic Arts agreed to buy PopCap Games to extend its drive into online titles that compete against Zynga Inc. (ZNGA), the biggest casual-games application developer on Facebook.
Riccitiello, in a July 17 interview on CNBC, called his company’s shares “a buying opportunity” over the next 12 months as digital sales grow and makers of home video-game consoles begin shipping new machines for the first time in six years, beginning this fall with Nintendo Co.’s Wii U.
“There is a perception among investors that the game industry is tough to invest in right now and they’re looking for the winners and they’re looking for the catalysts,” he said.
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