EA CEO: We should have bet on the Wii

[Ail]

HappySqurriel said:

bumidan said:
You have to take into account revenue and profit.

If EA had a 20% decline in revenue, but a 20% increase in profit, their stock would take a massive plunge.

 

I doubt it ... I have seen countless companies close unprofitable divisions (which will result in lower revenue and higher profit) and the second the announcement is made their stock tends to rise very quickly.

That is only true in a market in recession or at least experimenting difficulties...

Each time Ford and GM close a plant their stock price goes up because every car maker is suffering and it's an understanding among stockholders that everything needs to be done to survive and turn a profit.

Same thing for Airlines..

Now in the game development market that is experiencing a 20%+ growth a year, and where there are companies turning huge profits while experiencing growth at the same time, I doubt a 20% decrease in revenue would be that welcomed for EA....( especially considering they have been touting themselves as the first 3rd party developer in the world and such a move would put them suddenly way behind Activision/Blizzard).

 

You guys have to remember something. Stock price doesn't reflect so much what a company has accomplished up to the present but much more what is the potential for the company in the future years ( or you wouldn't have companies trading at 30+ P/E).