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 Analyst Michael Pachter from Wedbush Morgan and Brent Thill from Citi are both expecting great things from video game publisher and developer Electronic Arts due to the recently announced company restructuring. This is pretty surprising considering that EA posted an 18% profit loss in their last quarterly financial reports.
Pachter pointed out that while the company's conservative approach towards business is less than ideal, he said that the EA can expect savings of around US$ 25 to US$ 30 million per year because of their business reorganization. Here's his explanation on this:
We anticipate that the business reorganization will position its four new 'labels' to further rationalize cost structure through better utilization of R&D staff, outsourcing of certain jobs, and more direct control of corporate staff functions. In our view, EA is well along the path of cost containment, and its diverse portfolio of brands is sufficiently strong to allow it to weather underperformance of one or more of its key franchises.
Thill gave a more general view on the topic saying that "We[Citi] believe [EA] has passed Level 1 of its new game plan, and this is a
multi-level story with plenty of room left for improvement." He pointed out that Electronic Arts has more tricks up its sleeve and that we can expect to see them to come out with more innovative games and make more money.
While we're pretty sure that both analysts must have done extensive research to make their predictions, we'll have to wait and see if they'll come true.
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