Apple (AAPL) shares rose again after the company announced the latest version of its iPhone. Despite the company reaching all-time highs again on expectations that the iPhone 5 will break previous sales records, there is one sector that is being overlooked: game developers.
Glu Mobile (GLUU) Chief Executive Niccolo de Masi said he expected revenue from Apple’s platform to account for 67% of its revenue in 2012. Glu forecast the following:
- Revenue between $94.4 million to $96.4 million in 2012
- Potentially exceeding earnings guidance, if the past iPhone 4S release is used as a guide
- 8 to 10 game releases in 2012
Another game company investors should look at is Electronic Arts (EA). EA, whose shares are down nearly 30% this year, was featured at the iPhone 5 announcement. Apple was demonstrating a new racing game, which had cars that looked more photo-realistic with reflections, and road with textures. EA was selected to showcase Apple’s new processor and the new graphics chip, both being twice as fast as the previous iPhone.
Business Section: Investing Ideas
1. Electronic Arts Inc. (EA, Earnings, Analysts, Financials): Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. Market cap at $4.52B, most recent closing price at $14.21.
2. Glu Mobile, Inc. (GLUU, Earnings, Analysts, Financials): Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. Market cap at $348.61M, most recent closing price at $5.35.
3. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $655.98B, most recent closing price at $699.78.
A game developer investors should be wary of is Zynga (ZNGA). Zynga is being sued for copying EA’s games. EA also recently hired Zynga executives
4. Zynga, Inc. (ZNGA, Earnings, Analysts, Financials): Develops, markets, and operates online social games as live services on the Internet, social networking sites, and mobile platforms. Market cap at $2.34B, most recent closing price at $3.08.
Here is a comparative chart of the companies mentioned:
Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. Message the author. He is ranked sixth (by points) on the all-time leaderboard. The leaderboard is located on your score icon -> Leaderboard. Members on Kapitall earn free points, and even more points with every Kapitall Generation trade. These points may be redeemed at the Kapitall store.
Disclosure: Author has a long position in EA.
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Electronic Arts Inc. (EA, Chart, Download SEC Filings)
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- Zynga, Inc. (ZNGA, Chart, Download SEC Filings)
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