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As video game business falls apart, recession spreads

Posted Oct 31 2008, 07:32 AM by Douglas McIntyre
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In a recession, people are supposed to be able to buy soap, hamburgers, beer, and video games. This downturn may be worse than most. Electronic Arts, posted a net loss of $310 million and said it would lay-off 6% of its workers.

It is stunning to imagine that the maker of iconic games like "Madden NFL" and "Spore" could be doing poorly, but consumer spending may be worse than even the federal government numbers show.

Now that earnings season is fairly far along, what people will buy and what they will part with is becoming more clear. Oil companies did well. Consumers are still buying gas. So are airlines. Someone is using a lot of oil.

Procter & Gamble did well. The toothpaste and deodorant franchises are safe. AT&T earnings exceeded expectations. The cell phone business is still booming. Ford and GM are expected to do poorly. That speaks for itself.

The EA results may give a tiny hint about where the economy is going, at least in the short term. Consumers will buy the necessities. Once it gets beyond items people need for their daily lives, they are cutting back. Even if playing football on a TV for six hours a day is fun.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Comments

 

how come no one is repoting anything on chevrons involvement with california oil and gas corp (cogc). i mean chevron did put alot of money into thier project and is getting some where around 50% of their land

eric (Posted 10.31.08 3:54 PM) Report Abuse

What did you expect from companies who design these games and then charge $60.00 per...........  Did u think that the average consumer who has been hit with the fact of tight budgets was just going to keep buying expensive video games.

irv (Posted 11.02.08 2:42 AM) Report Abuse

Another reason I feel is the stupid DRM they put on their big time games, pushing regular consumers away.

Brian (Posted 11.02.08 8:24 PM) Report Abuse

what good is it dumping all this money into the banks if the billions of dollars are going into year end bonus from bailout funds for management and employees..

it makes alot of sense..are these really business people..when these banks and markets are in such a mess..do they use any common sense anymore? no wonder the mess we are in ..eveyone for themselves now...or do they even care as long as they fill their pockets..perhaps one day they will start to live like the rest of the people..having to do without their 40,000 spa weekends. their 1,000.00 bottle of wine for their big parties...

these are the people you can blame for the shape the markets and banks are in...

too much greed in these top business people they need to step back into reality..

because they are a joke.....they need to be rid of some of these people..because things will never get any better...you need honest people to run a good business.....and when things start to get bad you step up and deal with it..

not push it aside till things get in such a mess they step out and leave it behind for someone else after they have made their money..I guess their reason for doing this it is not enough for the best and brightest working to keep their companies profitable..if this is the case why have they lost so much money if their the best...

why be asking for all this bailout money..something wrong here....

san (Posted 11.03.08 1:58 PM) Report Abuse

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