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Why do the video-game software stocks like Electronic Arts (ERTS) have such high P/E ratios?-- Barry
: These companies have high P/Es because their earnings are extremely lumpy and tend to come at the end of the cycle, while we are at the beginning of a cycle here. So, companies like Electronic Arts won't earn much this year, but in two or three years they will earn a great amount of money, and investors tend to look at where earnings will peak when valuing the stocks.
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