The notion of technology as being relatively insulated from the credit crunch imploded earlier this year. It now appears the idea of the video segment being practically recession proof is heading for the same outcome.
Shares of Electronic Arts tumbled nearly 18% Friday, even as the broader market continued its recent rally. Late Thursday, the video game maker reported a wider-than-expected loss for its fiscal second quarter and forecast much weaker-than-expected bottom-line results for the full fiscal year.
EA was hit by company-specific issues; namely, aging titles and the delayed release of the next Harry Potter movie until summer 2009, meaning no related video game sales this holiday season.
But EA is not alone in suffering. After reporting very strong sales figures for the first half of its fiscal year, Wii maker Nintendo warned that its fiscal year profits won't meet prior expectations due to a stronger yen and weaker global economy.
As for non-consumer technology, AmEx's plans to cut technology-related spending is another blow to companies like Sun Microsystems, which fell 13% Friday after reporting weaker-than-expected fiscal first quarter results.
At this point, only IBM and H-P have been relatively unscathed by the global economy's woes. How long can that last?
EA's Downside Surprise: Gaming Isn't Recession Proof After All
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