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JP Morgan Downgrades EA Stock, Cites Competition

J.P. Morgan has downgraded shares of major publisher Electronic Arts to 'neutral', referencing both growing competition from game publishers such as Activion and Microsoft, as well as concerns over reduced hardware shipments for next-gen consoles.
According to a MarketWatch report, financial institution J.P. Morgan has downgraded shares of major publisher and developer Electronic Arts to 'neutral' from 'overweight'. This is due to both concerns over harsh competition for the top EA games, as well as the looming possibility of further hardware shipment cuts such as those recently announced by Microsoft. In the note, J.P. Morgan analyst Dean Gianoukos explained his belief that shares of EA have already taken into account the possible next-gen growth shown by the company's slate of titles for Xbox 360, PlayStation 3, and Wii. The company's upcoming catalog boasts a number of high profile releases, including Army of Two for the Xbox 360, as well as the multiplatform Harry Potter and the Order of the Phoenix summer movie tie-in. However, the analyst commented specifically that that EA faces "serious competitive threats" from other high profile multiplatform releases, such as Activision's Shrek The Third and Spider-Man 3, as well as Microsoft's Xbox 360-exclusive Halo 3. Nonetheless, EA does seem well primed competitively for the coming year, having posted record revenues over the Christmas quarter of $1.281 billion, driven by a number of notable releases such as Need for Speed Carbon, FIFA 07, The Sims 2 Pets and Madden Madden NFL 07. In addition, the company has also commented that it plans to throw more support behind Nintendo's platforms, including both the Wii and DS, noting in a recent conference call that it aims to become the top third party publisher for both platforms.

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