Tuesday, February 3, 2009

The benefits of low expectations

After the market close, we got earnings results from Electronic Arts (3.7% of portfolio). The results were poor, the outlook was not much better, and the company announced layoffs. But very low expectations were already priced into the stock, and so it is trading modestly higher in the after hours session. I plan to hold the stock for the longer term (6-12 months or more) in anticipation of a gradual recovery in their profitability.