This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Next Generation's Software Growing Pains

"You can't be thinking, 'I'll buy them next November,'" says the fund manager. "The stocks are going to be a lot higher then unless something crazy happens with the consumer."

No less important than the debate about when to buy is what to buy. The fund manager, for instance, likes -- and is long -- both Electronic Arts (ERTS) and Activision (ATVI - Get Report), saying both companies have a strong lineup of hits for the current game machines.

For his part, Spiegel likes -- and is long -- Take-Two Interactive (TTWO - Get Report), arguing that the company is poised to do well whenever it releases the next version of its flagship franchise, Grand Theft Auto.

Still others ask, why choose? "You could buy a basket of them, and you will make money," says Steve Monticelli, president of Mosaic Investments, which has no current positions in the sector. "They will move as a group."

But before that taking-off point, investors may need to endure some pain. As EA CFO Warren Jenson told investors and analysts earlier this month at the Harris Nesbitt Media & Entertainment Conference in New York, "This is a transition. Expect the unexpected."

That's certainly the lesson of past console cycles, particularly if by "unexpected" Jenson means "unpleasant."

Overall game software sales flatlined during the last console transition. Companies such as EA and Activision saw their bottom lines dip deep into the red. And during the last two transitions, many software publishers saw their stocks hit bottom within months after the new consoles launched.

And those were often the success stories. At the opposite ends were companies such as Acclaim and 3DO that, instead of riding the next generation to new prosperity, instead were ridden off the rails and eventually forced to close shop.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
THQI $0.31 0.00%
ATVI $25.53 0.00%
MSFT $46.92 0.00%
SNE $30.54 0.00%
TTWO $27.55 0.00%

Markets

DOW 18,011.94 -28.43 -0.16%
S&P 500 2,109.60 -2.13 -0.10%
NASDAQ 5,076.5240 -6.4050 -0.13%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs