Reportedly, U.S. District Judge Charles Breyer has ruled out
Robin Antonick's 'fraud' claims against
). Antonick was a former programmer with EA and wrote the program
of the earlier version of
Earlier, Antonick had alleged that EA used his code for
successive versions of Madden game without paying him any
royalty. EA last paid royalty to Antonick in 1992. The programmer
filed a lawsuit in 2011 and sought damages worth $16 million and
approximately $200 million from the profits that the game earned
for EA before 1996.
Though the 'fraud' claim brought in by Antonick has been
refuted, the trial related to EA's breach of 1986 contract with
the programmer and its compensatory damages will start from Jul
However, EA has denied using Antonick's codes for the later
game. The results of the trial are particularly important for EA
as the company has raked in more than $4 billion in revenues from
the franchise by selling in excess of 85 million copies.
Moreover, EA has announced
Madden NFL 25
will release on
) consoles, including the upcoming upgrades - Xbox One and
PlayStation 4, respectively.
We believe that any adverse ruling will dent EA's cash flow.
However, we note that trials of this kind tend to linger over a
period of time. Hence, we don't see any near-term concern for
Nonetheless, we believe that EA's high-quality titles and a
robust product pipeline along with increasing online exposure and
traction in the social and mobile gaming market will boost its
top line over the long term.
However, we believe that EA faces a number of headwinds that
include a soft video game industry performance, particularly due
to weakness in retail sales amid an aging console system
lifecycle. Additionally, competition from
) and other gaming companies are the near-term headwinds.
Currently, EA has a Zacks Rank #2 (Buy).
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