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Michael Pachter: EA's indifference is making investors leave |
Listed in: Tags: Activision, Electronic Arts, Michael Pachter
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After EA's disappointing quarterly report, followed by a drop in video game shares last week, investors are now abandoning the publisher, mainly because EA management has shown indifference in handling their predicament.
Despite having similar problems, Activision has made steps to ensure investors of their company's strength and growth. EA, on the other hand, has remained aloof on the matter.
Industry analyst Michael Pachter writes,
The reason for the disparity in valuation is simple: investors believe that [Activision] has "good" management, given that the company has consistently beat expectations and raised guidance, while being incredibly investor friendly; in contrast, investors appear to believe that EA has "bad" management, given that the company has consistently missed expectations and lowered guidance, while projecting an appearance of smugness bordering on hostility to investors.
Pachter has pointed out before that EA is very much capable of turning things around. Pachter still maintains that EA remains strong and is on a road to improvement, although, their only shortcoming would be in ignoring investor concerns. This is even complicated further by the fact that investors are no longer showing confidence that EA can indeed turn things around. EA has dropped 18% in shares since Thursday.
EA has yet to make a statement on the matter, but it appears that they have to take action - and fast.
Related articles:
Via Games Industry
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There are always major problems with their games that they just choose to ignore instead of do something about. For example, the graphical strobing and easy goal glitches in NHL09 for both PS3 and XBOX360 still aren't fixed, despite miles of complaints in their support forums.
I think the biggest insult is that they have one official person responding, but it's obvious even they aren't getting the help they need from their own company.
Most messages go ignored completely no matter how many thousands of people report major issues with their titles when other publishers don't seem to have any problem putting out regular patches for even the most minor problems.
So it's not only investor confidence that's waning, it starts at the customer level most. They will continue to have major economic problems until they address customers as well as investors.
rAy
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