Electronic Arts ( ERTS) is expected to report a middling quarter at best later Tuesday.

But many investors and analysts already are focused on the future.

The company itself predicted months ago that results for its holiday quarter would likely fall shy of those it turned in for the year-ago period. After recent sales data from NPD indicated plunging retail sales in December for EA's games, many analysts have concurred with the company's assessment.

But to at least some of them, none of that really matters. What they see is a company in the prime position in a fast-growing market.

"I'm not that concerned with the next quarter or two," said Christopher Casey, a portfolio manager at Boston Private Bank, which is long shares of EA.

The next generation of consoles, expected to debut later this year, is "going to benefit strong software franchises like Electronic Arts owns," Casey added. "No one can measure up to them."

However, that wasn't necessarily the sentiment throughout 2004. The company was forced into a price war by Take-Two Interactive ( TTWO) on the sports game front. Meanwhile, EA found itself largely lost in the shuffle during the holidays, with the lion's share of the industry's sales going to mega hits Grand Theft Auto: San Andreas from Take-Two and Microsoft's Halo 2.

In response, EA consistently offered analysts disappointing forward guidance last year and ended up falling shy of Wall Street's earnings estimates last quarter.

And analysts aren't expecting the company's operating results to get much better any time soon.

Earlier this month, both GameStop ( GME) and Electronics Boutique ( ELBO) warned that hardware shortages last quarter crimped their software sales and their overall results. Because EA is the market leader in video-game software, that's a bad sign for the company, analysts say.

More recently, NPD released its sales data for December. While overall retail sales of video games fell 1% from the same month in 2003, sales of EA's games plunged 18%. For the quarter, EA's sales were off 16%, according to NPD.

NPD's data are only for sales in the U.S. and don't include sales of PC games. Still, the results from NPD and the retailer warnings were a sign that the holiday period didn't go well for EA.

Indeed, based in part on those results, Wall Streeters polled by Thomson First Call are expecting the company to post earnings of $1.17 a share, excluding charges, on sales of $1.42 billion. That's on the low side of the company's predicted range and below last year's results.

And Wall Street is expecting another so-so year for EA in fiscal 2006, predicting that its sales and earnings will grow about 7%.

Despite the problems, investors stuck with EA's stock last year, as the company's shares closed the year up 29%. That gain wasn't as good as that posted by rivals such as Activision ( ATVI) or THQ ( THQI), but it bested the stock gains of Take-Two and of the broader market.

EA's shares closed regular trading on Monday off 59 cents, or 1%, to $57.67.

Many investors and analysts believe EA is one of the best bets for the long term.

One portfolio manager, who asked not to be named, said he was hoping that EA would announce a disappointing quarter so that investors might sell off the stock. EA's potentially disappointing results for this past quarter are just that, he said: in the past.

EA is a "great company, great management team with great properties and a great stock," said the portfolio manager, whose fund currently has no position in EA.

In recent weeks, the company has moved to address the threat on the sports game front, signing long-term exclusive deals with the National Football League and sports media company ESPN . Although some analysts have worried about the price EA paid for those deals, they likely will minimize the competition from Take-Two. The former deal cut the legs out from under Take-Two's most successful sports game last year, and the latter took away the ESPN brand from the company.

Meanwhile, analysts are pointing toward the next generation of consoles and the recently released handheld gaming systems from Nintendo and Sony ( SNE) as growth opportunities for EA.

With development costs expected to jump for Microsoft's ( MSFT) upcoming Xbox successor and the next iteration of Sony's PlayStation, analysts expect growing consolidation in the game business as developers look to diversify their lineups and try to find economies of scale. Unlike many of its rivals, EA already has the product breadth and the financial resources to be on solid footing for the next console cycle, analysts believe.

"We believe the company's size and scale should better allow Electronic Arts to withstand market gyrations in the transition period and to continue gaining share at the expense of smaller publishers," said Colin Sebastien, an analyst with Thomas Weisel Partners, in a note issued last week. (Thomas Weisel has not done recent investment banking for EA.)

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