2-Star Stocks Poised to Plunge: Electronic Arts?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game publisher Electronic Arts (NAS: EA) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Electronic Arts' business and see what CAPS investors are saying about the stock right now.

Electronic Artsfacts

Headquarters (founded)Redwood City, Calif. (1982)
Market Cap$4.0 billion
IndustryHome entertainment software
Trailing-12-Month Revenue$4.1 billion
ManagementCEO John Riccitiello
Interim CFO Kenneth Barker
Return on Equity (average, past 3 years)(10.2%)
Cash/Debt$1.9 billion / $539.0 million
CompetitorsActivision Blizzard
Nintendo
Sony

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 12% of the 2,255 members who have rated Electronic Arts believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star ikkyu2, succinctly summed up the bear case for our community:

I never will understand this company's financials or management. It is a dominant player in its core business but is seeing its edge chipped away by social media, casual gaming, and mobile. ...

It's a case where the quality of the product and the excellence of execution on projects somehow isn't matched by the big-picture global management strategy.

I first made this thesis in 07 and it's netted me a couple hundred CAPS points so far. I'd sure like to hear from somebody telling me why I'm wrong.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool has sold shares of Sony short. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard and Nintendo. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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