This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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), 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), 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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs