Electronic Arts Beats

Updated from Jan. 25

Investors and analysts have said they're focusing on the future with Electronic Arts (ERTS - Cramer's Take - Stockpickr). But on Wednesday, investors at least seemed to be more attuned to the recent past.

In its earnings report Tuesday afternoon, EA handily beat the Street's consensus. But its numbers got a boost from currency fluctuations. Worse yet, the video-game software giant gave disappointing guidance for its current quarter, and warned of an uncertain environment over the next couple of years.

In a slew of reports issued Wednesday morning, many analysts, pointing to the company's guarded guidance and current valuation, reduced their earnings estimates and reiterated their previous lukewarm ratings on EA's shares.

EA's earnings report "reinforces our thesis that the new console transitional period will require higher levels of R&D, and pricing should continue to be under pressure," said Merrill Lynch analyst Karen Russillo in her note, restating her previous "neutral" rating on EA shares. "We maintain that it is difficult for us to see much in the way of earnings leverage in the next couple of years as the company increases its investment ahead the next cycle. ... We believe that investors will not likely continue to pay a premium for growth that may not come for another two years."

(Electronic Arts has been an investment and noninvestment banking client of Merrill Lynch in the last year.)

Despite such sentiments, investors focused on the positive. Shares of EA were up $1.38, or 2.4%, in recent trading to $58.92.

They may have been taking their lead from the company's executives, who, on a conference call, touted the recent signing of exclusive deals with the National Football League and ESPN -- and that EA's results met its earlier guidance.