Bad news from

Electronic Arts

(ERTS)

may be good news for bargain hunters.

That seemed to be the consensus of money managers and sell-side analysts, after the video-game publishing giant

issued disappointing guidance late Tuesday for its coming fiscal year. The lowered outlook, which followed an earnings

warning earlier this year, rocked EA's shares on Wednesday. In recent trading, the company's stock was off $4, or 7.6%, to $48.90.

The selloff creates a buying opportunity for longer-term investors, argue some analysts and money managers. EA's results over the next year or so will likely be uninspiring, thanks to the game-hardware transition set to begin later this year. But the company has been the dominant game publisher of the current generation of game consoles and likely will be the leader for the next one, meaning that EA's profit, revenue and stock price likely will rebound once the transition is over.

"If you believe in the industry and feel you understand it, I think it's kind of a core holding," says Norm Conley, a portfolio manager for JAG Advisors and a contributor to

TheStreet.com's

sister site,

RealMoney.com

who is long EA. "I view it as a pretty good opportunity in here."

While agreeing that EA's going to be a long-term winner, other money managers and analysts argue that the smart thing to do is wait. With the company projecting that its bottom line will deteriorate in the next two quarters, and some analysts predicting that the transition will continue to affect the company's results even after that, EA's shares likely will trade lower before rebounding.

"I just don't know if there's any rush" to buy the stock, said Chris Casey, a portfolio manager at Boston Private Bank, which is long shares of EA, "because it's going to be soft for a while."

While the company met the lowered guidance it issued in March, it warned investors that first quarter and full-year earnings would likely fall short of analysts' estimates. Although EA is predicting that sales will grow 9% to 12% in its current fiscal year, the company forecast that expenses will grow even faster.

Analysts expect

Microsoft

(MSFT) - Get Report

to release its next-generation Xbox later this year and

Sony

(SNE) - Get Report

and

Nintendo

to follow with their next-generation machines as early as next year. During similar transitions in the past, sales of games for the next-generation consoles often haven't picked up fast enough to replace declining sales and prices of previous generation games.

At the same time, because of the sophistication of the next generation machines, publishers have typically had to up their spending on game development.

Although the new consoles aren't out yet, EA is gearing up to produce games for the new platforms. The company also has been investing in developing games for Sony's new PlayStation Portable handheld system and for mobile phones.

EA predicted that those development costs will rise this fiscal year, helping to weigh down its expected earnings.

Meanwhile, EA has signed exclusive deals with the

National Football League,

Disney's

(DIS) - Get Report

ESPN media company and

college football. The moves will preclude the kind of cutthroat price competition EA saw this past year from

Take-Two

(TTWO) - Get Report

, which offered its own line of sports games at less than half the initial prices of EA's titles. EA hasn't said what it paid for those deals, but analysts expect that they are a significant factor in EA's rising cost structure.

But many believe that those deals and EA's broader investments are likely to pay off in the future, if not this year.

"In the long term, the move they made in football will benefit them a lot," said Steve Monticelli, president of Mosaic Investments, which has no position in EA. "I have no worries about the company long term."

The key question for Monticelli and for other investors, though, is when to jump in. EA is holding more than $9.60 a share in cash and marketable securities. Excluding that amount from its share price, the company is trading at about 25 times even the low end of its projected earnings range for this year. That's at the low end of the company's traditional valuation range, analysts noted.

However, the stock could go even lower. EA predicted that it will lose 22 cents to 28 cents a share in its first quarter and will be break-even in its second quarter, both of which would represent a significant downturn from the year ago periods.

The company expects that things will pick up in the back half of its year, with some 50% to 55% of sales coming in the holiday quarter -- its fiscal third quarter.

But those back-weighted expectations could prove difficult to meet. Game publishers often delay releases, which can affect sales for particular quarters. And EA's ability to hit its numbers could be contingent on whether Microsoft does indeed release its new Xbox -- and how successful the device is in the short term.

Additionally, notes Monticelli, the two biggest video game retailers,

Electronics Boutique

(ELBO)

and

GameStop

(GME) - Get Report

, are planning to

merge, which could disrupt some sales.

"There are more questions about near-term perform than there have ever been," said Monticelli. But, he says, EA's "valuation is attractive at this point. My guess is it's going be more attractive."