Next level for Electronic Arts: Shares tanking after CEO exit

After Electronic Arts announced Monday that CEO John Riccitiello was stepping down at the end of the month, the company’s shares rose nearly 3 percent in after-hours trading. Today, Wall Street’s not playing. Shares of the Redwood City video-game maker are sinking, down about 8 percent to $17.20 as of this post after a steady rise over the past few months.

EA also said it expects current-quarter financial results to miss expectations, for which Riccitiello took responsibility. Acting CEO Larry Probst, also a former EA CEO and now its executive chairman, said the time was right for a change at the top, according to the Wall Street Journal. Some point to big changes in the industry — the rise of social and mobile games from companies such as Zynga, the fall of console games, and the upcoming launch of new game consoles — and agreed with the timing of the move.

But as the Merc’s Troy Wolverton pointed out, Riccitiello’s record at EA over the past six years was mixed as he dealt with rapid changes in the industry. EA aimed high with “Star Wars: The Old Republic,” which is largely seen as a dud, and a long-awaited release of “SimCity,” which went awry. But the CEO also presided over growth of the company’s digital efforts. Speaking of mixed, “EA may have more work to do, but we believe that Mr. Riccitiello had the company on the right course,” Michael Pachter of Wedbush Securities reportedly said.  Bottom line: The upheaval brings more questions than answers to one of the world’s biggest video-game makers as it deals with continuing uncertainty in the industry.

 

 

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