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Analyst: EA financial troubles are only beginning


While most analysts have been upbeat about EA's $195 million loss in the last quarter, Deutsche Bank analyst Jeetil Patel is saying it's only the beginning. Deusche Bank has downgraded the stock to "sell,", with Patel pointing to a "lack of major outperformance on unit volumes" among EA titles. He says despite market enthusiasm, EA is not achieving the profits it once did, a situation he doesn't see changing in the foreseeable future.

One thing Patel really gets into is that EA's product is not moving quickly. He states that several of the next-gen games have been marked down within 4-6 months of release and thinks "this could become a more widespread problem considering lackluster product quality, weak sell-through thus far (even on major franchises), and a crowded holiday selling season that should favor a handful of titles (Call of Duty 4, Halo 3, Super Mario, Guitar Hero to name a few)." Games like Rock Band, The Orange Box and Crysis are pointed out as not being owned by EA -- they can't be depended on for fiscal franchise fortitude in the long term. Patel goes on to conclude that EA will continue to lose market share going forward.

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