But what do all those numbers in the article below mean? I’ll try and explain it briefly.
Before I go into this, I want to make sure everyone knows I am not being a Jim Cramer here. I’m not saying this stock is a good buy. I’m not saying it’s a bad buy. No “bull” or “bear” sound bytes. All I’m doing here is giving my assessment of how I think the numbers announced affect the game I play, Warhammer Online. It’s my opinion, and here it is.
First, from the filings we see that EA is cash heavy. They have cash equivilents of roughly $2BN. This is pretty good. They could sustain losses such as they had for nearly 3 years. Their total assets from the balance sheet is $5.2BN; total liabiliaties less the amount of stockholder equity is $2.15BN. The Current Liabilities line items shows that they are pretty much debt free.
So yes, they are now going to be “agressively managing” the money that they now have by the cost cutting measures such as layoffs and the closing of 12 facilities, company wide, but also on how they bring things to market. How does this affect WAR? The new IP as they called it which includes WAR was mentioned as being quite profitable and that is where there is growth strength, in subscription titles; all but Star Wars had made money. They also were talking up microtransaction based fee income. We will have to wait and see if this is implemented in WAR.
EA is looking to expand into the Asian markets as well, which would only mean more money for WAR.
Although they hyped the new MMO with Lucas Arts, the new Star Wars MMO, they were talking about sequels for their current titles, including WAR. John Riccitiello, CEO of EA said “we expect to benefit in the future from increased sales from these franchises. Generally, games with a “2” on them will sell better than the first version – and do so with a lower R&D budget” So we can expect a WAR 2 at some point.
Final word: EA is putting it’s dollars behind Warhammer Online: Age of Reckoning. We can expect a sequel probably in 2010. I won’t recommend buying EA stock but I will recommend buying WAR if you haven’t already. BUY BUY BUY!
