erts

Activision Blizzard (NASDAQ: ATVI), a software publisher which competes with Electronic Arts (NASDAQ: ERTS) and distributes games for consoles from Sony (NYSE: SNE), Microsoft (NASDAQ: MSFT), and Nintendo (OTC: NTDOY), is a stock I own in a long-term account. I've been thinking about selling at times, but for now, I'm holding on. The long-term prospects still look good for the most part.

But, I had been looking at various trading ideas and wanted to capture a shorter-term gain for a trading account. The market has been so tough this year. When the recent rally in the indexes started, I didn't want to become part of the group that was desperate to get in on the action, only to expose my portfolio to more risk than necessary. Believe me, when you're afraid of missing a rally, you just might end up with some bad timing.

It goes without saying that discretionary purchases are under pressure in the era of the frugal consumer.

By definition, that rules-out most high-tech game plays, but there are exceptions, and Electronic Arts (NASDAQ: ERTS) is one.

I would buy ERTS at these levels, basically on the future strength of three franchises; Madden NFL, The Sims, and Need for Speed. The First Call FY2009/FY2010 EPS estimates for ERTS are 96 cents to $1.29.

May marked the third-straight month that video game software sales dropped, a sign that the economic downturn continues to weigh on the gaming sector. NPD Group released its video game sales data yesterday afternoon, reflecting sales that fell to $448.9 million during May. These monthly results are 17% lower than the same period last year. The drop in software sales was somewhat expected, as the Street called for a drop between 15% and 20%. Hardware sales dropped 30% during May, totaling $302.5 million.

But the comparisons are difficult as major hits were released during spring 2008, including Grand Theft Auto IV, Mario Kart, and Super Smash Bros. Brawl. There were no such major hits released this year.

Analyst upgrades:

• Goldman upgraded SanDisk (NASDAQ: SNDK) to Buy from Neutral and raised their target to $22 from $16 citing the renegotiated royalty agreement with Samsung.
• Goldman also upgraded Starwood Hotels (NYSE: HOT) to Buy from Sell and raised their target to $27 from $11 citing strong operating leverage as RevPAR recovers.
• KeyBanc upgraded Werner Enterprises (NASDAQ: WERN) to Hold from Underweight citing a recent improvement in freight demand.
• J.C. Penney (NYSE: JCP) was upgraded to buy from Underperform at Banc of America/Merrill.
• Savvis (NASDAQ: SVVS) was raised to Outperform from Perform at Oppenheimer.
• Sanofi-Aventis (NYSE: SNY) was upgraded at Citigroup to Buy from Hold.

Take-Two Interactive (NASDAQ: TTWO), a video-game publisher that competes with Activision Blizzard (NASDAQ: ATVI), THQ (NASDAQ: THQI), and Electronic Arts (NASDAQ: ERTS), reported Q2 results on Tuesday after the bell.

Revenues dipped considerably to roughly $230 million. Last year at this time, Take-Two generated $540 million on the top line. Blame it on a very tough comparison. The publisher was basking in the glory of Grand Theft Auto IV in 2008, so that has to be taken into consideration by investors.

Electronic Arts (NASDAQ: ERTS) hasn't been doing as well as its colleague Activision Blizzard (NASDAQ: ATVI). Indeed, when it comes to the numbers, Activision, which is responsible for franchise hits Guitar Hero and Call of Duty, has its competitor beat.

But EA recently released an exercise system for the Nintendo (OTC: NTDOY) Wii that was highlighted at CNBC.com. The piece mentions the enormous marketing presence that is supporting EA Sports Active. You get a couple accessories with the software: a leg strap that is used like a controller to interact with the screen, and a resistance band to increase the effectiveness of the workout. Oprah Winfrey's trainer apparently assisted EA with the design.

Activision Blizzard (NASDAQ: ATVI) has a lot of great franchises. Guitar Hero, Call of Duty, World of Warcraft ... these brands are very valuable to shareholders. But there's one franchise in particular that could use a little help in the buzz department. And according to a recent press release from the publisher, that's exactly what it will be getting via a fresh reboot.

The Tony Hawk skateboarding games have been very popular. Unfortunately, you don't hear about the franchise that much anymore (well, I don't, at least). All we hear about is the Guitar Hero series of games. As a shareholder in Activision Blizzard, I'm hoping that this situation will soon change for the better. When Tony Hawk: RIDE is released this fall, it will use a special skateboard controller that will supposedly make the gaming experience completely new and unquestionably exciting.

It's been a busy week for video-game investors. Activision Blizzard (NASDAQ: ATVI) reported earnings on Thursday. Nintendo (OTC: NTDOY) also came out with numbers. In addition to those two, Electronic Arts (NASDAQ: ERTS) and THQ (NASDAQ: THQI) both published their respective results as well. It's interesting to see how the market has reacted to the stats.

EA successfully scored a beat on the bottom line. On an adjusted basis, EA posted a loss of $0.37 per share. The analyst community thought that a $0.43 per-share loss was possible. Not bad. It was reported that EA has been aggressively cutting costs to improve its situation.

Activision Blizzard (NASDAQ: ATVI), a video-game publisher that competes with Electronic Arts (NASDAQ: ERTS), THQ (NASDAQ: THQI), and Take-Two Interactive (NASDAQ: TTWO), reported some cool first-quarter numbers on Thursday after the bell. On an adjusted basis, the company earned 8 cents per share. According to analysts, Activision Blizzard was only supposed to do around 5 cents per share.

Not only was the bottom line solid, but revenues on an adjusted basis also came in ahead of expectations. And you can thank the usual suspects for powering up the quarter. You've got Call of Duty. You've got Guitar Hero. You've got World of Warcraft. These best-of-breed franchises are selling a lot of copies on Sony's (NYSE: SNE) PlayStation 3, Microsoft's (NASDAQ: MSFT) Xbox 360, and Nintendo's (OTC: NTDOY) Wii.

Electronic Arts is recently up 34c to $21.43. ERTS is scheduled to report Q4 EPS after the market close today. ERTS May option implied volatility is at 86, June is at 63; verses its 26-week average of 68, according to Track Data, suggesting non-directional price movement after EPS.

Active equity option families at mid-day of trading of trading according to Track Data are: Citigroup (NYSE-C), Bank of America (NYSE-BAC) and General Electric (NYSE-GE).

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

You seriously have to be kidding me. Apple (NASDAQ: AAPL) is interested in Electronic Arts (NASDAQ: ERTS)? I can't believe what I just read.

Well, to be accurate here, I'm not sure if this is a strong rumor or not. Then again, there has been a lot of speculation over the fate of EA since it has been doing so poorly and since its stock has seen a fall in value the last few years (it should be noted, though, that the stock has been strong the last several months).

But Barron's reports that Apple may want to buy the gaming publisher since it has a lot of cash to utilize for investing. Apparently, Guy Adami of the CNBC show Fast Money said there was some buzz equity surrounding this possibility (it was also mentioned that maybe Apple could purchase Twitter . . . but that's another story!).

Whilst perusing various sites this morning, I found a very interesting article about the upcoming incarnation of Electronic Arts Sports' (NASDAQ: ERTS) Madden NFL 10 --- which highlights Troy Polamalu and Larry Fitzgerald on the cover (glad they chose a Steeler for the Madden Curse).

There are some interesting developments in the game this year, especially the "fumble pile," which could make the game more fun to play - but will it help the stock? Make sure to browse the article for the five new developments (gang tackling and new formations!) in the latest incarnation of the video game franchise.

Today was a very light event day outside of two DJIA components reporting earnings. We saw another instance where stocks held on to gains and did not sell the news too bad. It looks like the indexes actually have made it six straight weeks up now. Here are today's closing bell levels:

DJIA: 8,131.33
S&P500: 869.57
NASDAQ: 1,673.07

Quite a run John Madden had, wasn't it? Quite honestly, I don't remember Madden as a coach - probably because he retired when I was five years old. More members of my generation will remember Madden as the bumbling color commentator for the likes of Pat Summerall and Al Michaels, interjecting insightful analysis like "boom" and "bang." Perhaps more will remember him for his unfettered bromance with Brett Favre, but I remember my first John Madden experience. I was sitting on the floor at my grandparent's farm watching a late-afternoon football game when this giant, jolly fat guy broke through the screen at the end of a Miller Lite commercial --- little did I know that "guy" would become one of the biggest endorsers of my lifetime.

GameStop (NYSE: GME) is probably the best friend to gamers who fall somewhere in between the casual and hardcore demographic. That's because CEO Dan DeMatteo has been quoted in reports as being very desirous of a price cut for the Sony (NYSE: SNE) PlayStation 3. If I read between the lines a bit, I get the feeling as if he almost wants to demand that Sony do something about its high-priced machine.

Thing is, though, he isn't in Sony's corporate shoes. Cutting the price of the PlayStation 3 is an event that I think is sure to come to pass in the next few months, but it's going to be very difficult on the company's bottom line.