On the 14th I visited an EA (Electronic Arts) office in Galway Ireland. The office was a large facility that provided customer support among other services. I got in a day early with my son James and we decided to try our hand at classic Irish links golf. We are not great golfers and we decided it was better to keep score by lost balls than stokes (13 between the two of us). James had a couple of beautiful shots into the Atlantic Ocean. The people were friendly and we enjoyed the country.
Oh yes and the training session went very well. We had a good cross-section of leaders from the Galway facility. One topic that was top of mind with the group was stock price. The EA stock price has been very low for a while and recently started moving up. It seemed strange to the group because the stock did not move much on an improved year-end report from March 2013 but on a change in company leadership and an announcement that the company was cutting costs.
We had a great discussion on how common it is when there is a change in leadership and the new CEO promises stern cost cutting Wall Street loves it. Just as in the days of turnaround CEO Chainsaw Al Dunlap, referenced in the Financial Intelligence book, was announced as the new CEO stocks of that company always went up. In fact, at his last company Sunbeam the stock went from $11 up to $19 on one day. The other issue that has supported higher stock prices is simply a very positive market in the last two months. What we learn from this is a stock price is only partially tied to company performance and financials. There are many other factors that can affect the price of a stock.