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!

Gamers Flirt With Bargain Bin

"If I had to make a timing call, I would probably say, 'wait till after Christmas,'" says Tony Ursillo, a buy-side analyst with Loomis Sayles, which is long Electronic Arts. "I'm not sure if we will get the same rock-bottom price in February that they are at right now, but you probably won't have to pay a whole lot more, and you'll potentially miss six months of frustration."

And the sector's investors have already seen a lot of aggravation. Over the last year, shares of EA, the behemoth of the industry, are off 27%. Shares of smaller rivals Activision and THQ have fallen 16% and 8%, respectively, over the same time period. Take-Two, caught up in a string of snafus, including the discovery of the explicit "hot coffee" sex scenes which forced it to pull its latest version of hit franchise Grand Theft Auto from store shelves, has seen its stock fall a whopping 65%.

Although each company is dealing with its own issues, the rocky transition to the new generation of video-game technology has weighed down the entire sector. Sales of games for older consoles have been dropping steadily. While companies have been investing heavily in games for new consoles, they haven't seen much of a payoff yet because there simply aren't enough consoles yet in consumers' living rooms.

Analysts don't generally expect the financial results to rebound until sometime next year when the new game consoles start to gain mass audiences.

Regardless of the longer-term outlook, however, some investors are betting on a repeat of profitable short-term trades. Last year, THQ and Activision and, to a lesser degree, EA, saw a run from the summer until mid-November as excitement built prior to the release of Microsoft's (MSFT) Xbox 360 console. With two more consoles on the way this year, similar enthusiasm could lift the sector.

2 of 3

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!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

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