Electronic Arts (ERTS) is expected to report Q3 earnings of $0.31 per share this afternoon. Before the company lowered its guidance last month, the consensus forecast had earnings at $0.56.
That huge miss is one of many troubling signs out of EA in recent months. The company announced plans to lay off 17% of its workforce in November, and more cuts are expected.
As the bad news piles up, there has been increasing speculation about EA being acquired, perhaps by Disney. CNBC’s Jim Goldman goes so far as to predict that “if EA announces more cuts tonight, and/or misses consensus, the stock might actually climb as takeover rumours will likely gain a little more momentum.”
The company is off to a promising start this year with strong sales of its blockbuster “Mass Effect 2.”
It has also sunk a huge marketing budget, including a Super Bowl ad, into “Dante’s Inferno,” which will be released tomorrow head-to-head with rival Take-Two’s “BioShock 2.” But despite the push, Broadpoint AmTech analyst Ben Schachter says the game is unlikely to be a huge hit.
EA stock is slightly up for the day.
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