As Electronic Arts ( ERTS) goes, so goes the video-game industry, according to conventional wisdom. So with the software company scheduled to release its fiscal fourth-quarter results after the bell Thursday, investors, competitors and analysts will be scrutinizing its report and comments for leads on the broader video-game market. But eyeing potential challenges in 2005 and 2006, the company may give guidance that neither accurately reflects the industry's outlook nor proves pleasing to traders seeking a near-term catalyst. As with many of its peers, Electronic Arts' shares have outperformed major averages year to date, up 6.6% after dipping 39 cents to $50.81 on Wednesday. But questions about the direction of the video-game market have arisen following recent reports from Sony ( SNE) and research firm NPD Group. Earlier this week, Sony said it expects to ship 14.1 million units of its PlayStation 2 console this fiscal year, compared to 20.1 million in its just completed fiscal year. Meanwhile, NPD said that the dollar value of sales of video-game consoles and software in the first quarter fell by 1% vs. a year ago to $1.8 billion. "If they
Electronic Arts are able to paint a rosier picture than Sony, you're going to see some price appreciation in the stock," said Joe Spiegel, a fund manager at Dalek Capital Management, which has no position in Electronic Arts. "If they're more downbeat, the entire space will take a beating. If they are kind of 'middle of the road,' it will be wait-and-see for E3." E3 -- the Electronic Entertainment Exposition -- is the video-game industry's big convention, where industry players typically make major announcements or debut new products. The exposition opens May 11.