Here's Why Microsoft and Electronic Arts are Plunging
Shares of Dow Jones Industrial Average component Microsoft plunged early Thursday after closing near a multiyear high a day before. Among other tech companies, Electronic Arts shares dropped while SolarCity shareholders enjoyed a noticeable gain. The Dow Jones itself was down about 50 points as of 11:35 a.m. EST.
GDP beats expectations
The U.S. GDP report came in better than expected early Thursday, showing that the nation's economy grew 3.6% in the third quarter. Economists had expected an increase of 3%. While a stronger-than-expected GDP report is generally regarded as a good thing for the economy -- and therefore the stock market -- investors may be projecting the effects such a report would have on the Federal Reserve's decision-making.
With the economy seemingly improving at a greater rate than anticipated, the Fed may be more likely to cut back on its economic stimulus measures.
SolarCity jumps on Tesla battery integration
Shares of SolarCity were getting a nice boost early Thursday, jumping more than 5% after the company announced a deal with electric car maker Tesla Motors. SolarCity's chairman, Elon Musk, is also Tesla's CEO.
SolarCity is still an upstart energy company, hoping to provide power from the sun on a mass scale. Under the deal, the company will start offering a bundle of Tesla's batteries alongside its solar panels. The batteries will initially be expensive, and may not make sense for many of SolarCity's customers, but by offering a battery backup solution, SolarCity's panels can provide power even when the sun isn't shining.
Video game publisher Electronic Arts said it would halt production of all projects currently under development at its DICE studio. DICE is the developer of Battlefield 4, EA's competitor to the wildly successful Call of Duty franchise from Activision Blizzard. Unfortunately for EA, Battlefield 4 has suffered from numerous bugs and connectivity problems. Many of the game's users have complained that Battlefield 4 cannot be played at all in its current state.
By shifting the studio's full resources to fixing Battlefield 4, EA is acknowledging the problems and could have them resolved faster. But the announcement may indicate that Battlefield 4's problems were far more severe than investors had expected.
Microsoft was underperforming the Dow early on Thursday, shedding more than 3% after closing near a multiyear high on Wednesday. Speculation circulated that Ford CEO Alan Mulally would not be named Microsoft's next CEO. Mulally, who has had successful executive stints at Ford and Boeing, was widely expected to take over the Windows maker following Steve Ballmer's retirement.
Although he isn't know for being a tech visionary, Mulally helped design Microsoft's recent reorganization and may be best equipped to help remake Microsoft's corporate culture. Admitedly, it's only speculation, and Mulally could still be named Microsoft's next CEO, but for now, investors appear to be reacting by selling shares.
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The article Here's Why Microsoft and Electronic Arts are Plunging originally appeared on Fool.com.Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends SolarCity and Tesla Motors. The Motley Fool owns shares of Microsoft, SolarCity, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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