Today: Electronic Arts (ERTS) CEO John Riccitiello will depart game maker as earnings head to another disappointing result. Also: Apple (AAPL) moves higher after dividend report, Hewlett-Packard (HPQ) gains on upgrade.
Electronic Arts CEO steps down, company says earnings will disappoint
A troubled time for Electronic Arts seemingly hit its peak -- or valley, as the case may be -- on Monday, as CEO John Riccitiello stepped down with the company preparing to announce disappointing earnings.
The Redwood City video game company announced the move Monday, effective March 30, in a news release that was quick to lavish praise on Riccitiello. The company's new interim CEO, Larry Probst -- who also preceded Riccitiello as CEO of the company from 1991 to 2007 -- cited his "passion, dedication and energy" in the announcement, and said the decision was mutual.
However, the second section of Monday's news release was the key to the move, with EA announcing that revenues and profits for the current quarter will come in at the bottom or lower than its forecast. This quarter is the final three months of EA's fiscal year, and the year has already provided plenty of disappointments for the company, which lost money in the previous quarter amid dwindling revenues.
Investors were certainly unhappy with declining revenues and profits, but EA was also having issues with its core customers, gamers. The company's most celebrated game launch of the quarter, "SimCity," suffered after server failures kept players from accessing the game, and gamers had already worked up anger at the company for its efforts to drive online revenue, helping ensure the company won the "Golden Poo" award for worst company of 2012. Earlier releases had also proven disappointing, including "Star Wars: The Old Republic" and the most recent "Medal of Honor" game.
The financial mess was the driving factor behind the change, however, with Riccitiello saying in his parting letter to employees, "My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year."
Investors seemed to be enthused by the departure of Riccitiello after nearly six years in charge, with the stock gaining more than 2 percent in after-hours trading despite the entwined announcement of disappointing earnings; in regular trading, EA shares dropped 0.9 percent to $18.71.
Analysts agreed that it was time for Riccitiello to go.
"He lasted a pretty long time given that the company hasn't really performed that well," Ascendiant Capital Markets analyst Edward Woo told Bloomberg News. "The fact that their stock is up on the news goes to show investors weren't that big a fan of Riccitiello."
Woo believes EA Chief Operating Officer Peter Moore will eventually win the permanent job.
Dividend talk boosts Apple as company focuses on Samsung battle
After Apple struggled while Wall Street was on a record-breaking winning streak, the two remained on different paths Monday, with the Cupertino tech giant gaining amid overall losses spurred by bailout talks in Cyprus that caused unrest.
Apple gained 2.7 percent to $455.72, its highest closing price in almost exactly a month, since Feb. 19. Investors were likely spurred by a Bloomberg News report that said the company expects to push its dividend more than 50 percent higher, increasing its annual payout to investors to almost $16 billion. The company's dividend payments and cash hoard have been a hot topic in the investment community, and news that Apple is planning a much higher payout likely increased demand for shares, pushing the stock higher.
"You need to attract new investors, and I think one way to do that is to pay out a bigger dividend," Topeka Capital analyst Brian White told Bloomberg.
Apple has surprisingly been advancing while Samsung falls since its Android-powered rival's splashy debut of its next smartphone, the Galaxy S4, last week. While Apple worked up a website that seeks to tell consumers why they should choose the iPhone over Samsung's latest, Apple has gained more than 5 percent while Samsung has fallen 5 percent.
Hewlett-Packard gains on upgrade as board election looms
While Wall Street indexes were having their worst day in more than two weeks, Silicon Valley stocks rode Apple to a gain, with the SV150 index increasing 0.2 percent on the day. Another formerly struggling stock that has been the focus of investor discontent had its own rally to help the index as well Monday: Hewlett-Packard.
The Palo Alto personal computer giant shook off reports that PC sales are even worse than expected so far in 2013 to gain 2.9 percent, boosted by an upgrade from Morgan Stanley analysts. The gains come as HP prepares to face angry investors at its annual shareholders meeting, where some have advocated a vote against certain board members who have overseen disastrous acquisitions.
The positive moves from two tech titans helped offset losses elsewhere, including HP CEO Meg Whitman's former home, eBay (EBAY). The San Jose e-commerce giant dropped 0.6 percent in a downfall analysts believe was sparked by moves toward new fees on PayPal from the big credit card companies; eBay doesn't seem shaken, however, as it rewarded CEO John Donahoe with a big raise after a successful 2012. Social-networking stocks had a tough day, with Zynga declining 3 percent as news of "Draw Something 2" leaking, LinkedIn dropping 1.8 percent, Yelp falling 2.4 percent and Facebook decreasing 0.6 percent.
Silicon Valley tech stocks
Down: Ruckus, Zynga, Yelp, Jive, Applied Materials, LinkedIn, NetApp, VMware, Cisco (CSCO), Splunk, Workday, EA, Oracle (ORCL), Gilead, Google (GOOG), Adobe (ADBE), SunPower (SPWRA), Nvidia, eBay, Facebook, Intel
The tech-heavy Nasdaq composite index: Down 11.48, or 0.35 percent, to 3,237.59
The blue chip Dow Jones industrial average: Down 62.05, or 0.43 percent, to 14,452.06
And the widely watched Standard & Poor's 500 index: Down 8.6, or 0.55 percent, to 1,552.1
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.