US markets are largely positive today,
due in large part to positive earnings-season economic data and
strengthening unemployment data, according to a consensus of financial
reporters. However, such is not the case for Electronic Arts, which is
trading down more than 6 percent after Brean Murray Carret & Co.
analyst Todd Mitchell lowered the company's price target from $28 to
$22.
As
reported by Market Watch, Mitchell's reassessment of EA came about due
to what he termed "creeping concerns" over the future of EA's recently
launched massively multiplayer online role-playing game Star Wars: The
Old Republic.
"Specifically,
initial sales appear to be below expectations, and casual observation
of early play is causing us to rethink our churn assumptions," Mitchell
said in a note to investors.
Released
to a strong critical reception on December 20, The Old Republic sold
more than 1 million units during its first week of availability. That
tally proved to be more than what EA could handle, as the game's launch
was marred by long wait times to access many servers.
Mitchell's
analysis of The Old Republic's situation isn't without its detractors.
Speaking with GameSpot, Electronic Entertainment Design and Research's
Jesse Divnich emphasized that it is far too early to measure the game's
long-term potential.
"Some
sell-side analysts have such bad tunnel vision on the market that they
fail to understand the mechanics of the MMO vertical," Divnich said.
"Whether MMO, console game, mobile, or social, each have a completely
different business model. It is erroneous to apply success metrics from
other verticals to the MMO market and that is exactly what a lot of
analysts are doing."
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