EA Stock Slips Following Godfather Delay

As reported yesterday, Electronic Arts is delaying The Godfather: The Game from the third quarter to the fourth quarter of the 2005 fiscal year. The move, made to ensure the quality of the game, according to EA, has caused a small backlash on the stock market, as Electronic Arts shares by around 4.7 percent to $57.46 by the market's close on Friday. Analysts at Banc of America Securities believed that the move would cause "at least 30% fewer sales for this game;" Harris Nesbitt analyst Edward Williams concurred, saying that: "Whenever a game is delayed out of the holidays invariably some sales are 'lost' -- never to be recouped." Nevertheless, BoA Securities maintained its "buy" rating for EA, as well as a $70 price per share target. Multiple firms also pointed out companies that could stand to benefit from the move in the 2005 holiday season, such as Activision and Take-Two Interactive. J.P. Morgan analyst Dean Gianoukos noted that titles such as Activision's Gun, and True Crime 2, and Rockstar's The Warriors will have less competition with the removal of The Godfather from the market, noted a MarketWatch report. As a result, Activision has become Banc of America Securities' top "buy" pick. However, this downward hiccup is still relatively small compared to the steady stock gains EA has gradually been recouping since its March announcement of smaller than expected profits, which sent the stock plummeting from a $71 high down to under $50.