Electronic Arts stock falls after departure of CEO Riccitiello

Shares of video game publisher Electronic Arts slumped Tuesday, following Monday’s surprise resignation of the company’s chief executive officer, John Riccitiello.

Stock was trading at $17.10 a half-hour before the market’s close, down nearly 8.6% from the previous day’s close, after news that Riccitiello would step down as of March 30.

Riccitiello was not well-liked by investors, who perceived him as being unable “to contain costs and consistently deliver against expectations,” wrote Macquire Capital analyst Ben Schachter. The company’s stock price over his six-year tenure reflects this lack of enthusiasm: shares are down about 67% from nearly $52 when Riccitiello was named chief executive in 2007.

“Our hope is that the board will focus on hiring a new CEO that will reduce costs while focusing on just a few high-potential franchises and new [intellectual property],” wrote Schachter.

Pacific Crest Securities analyst Evan Wilson wrote that Riccitiello “never got enough credit” for cutting 25% of its development base. Despite restructurings, reorganizations and studio closures, EA still is in search of the one thing that will lift its margins -- new hits, he observed.

“That is what has given us low confidence,” Wilson wrote. “Because it is hard to cut your way to better games.”

The board appointed Larry Probst, who the company’s long-time chief executive, as executive chairman to lead the company as the board searches for a permanent CEO.

Wilson speculated that EA’s chief operating officer, Peter Moore, is the most likely internal candidate to succeed Riccitiello. The British executive rose to prominence within the interactive entertainment world as president and chief operating officer of Sega of America. He headed games development at Microsoft Corp.’s game studios before joining EA in 2007 as president of EA Sports.

“If not Mr. Moore, we think EA will go after someone with a strong digital background,” wrote Wilson. “If Mr. Moore is passed over, EA might risk losing another executive.”

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