Electronic Arts stock has been trending downward lately, gradually shedding more than 15 percent of its value between an early November report of record revenues and the end of the year. Today, Wedbush Morgan Securities analyst Michael Pachter sent a note to investors with his expectations for the company's fiscal third quarter (which runs October to December), and he believes things are looking up for the publisher, even if it didn't sell as many console and PC games as it did the holiday season before.

　　Looking at EA's holiday release schedules for 2006 and 2005, Pachter concludes that they're roughly comparable, with the sole exception being the earlier year's Harry Potter and the Goblet of Fire games, which brought in approximately $120 million in revenue. While that could be partially offset by increased sales in EA's annualized franchises, Pachter expects the publisher's sales for the quarter to be roughly flat, or perhaps lower than last year if software attach rates for the Wii and PlayStation 3 lag behind the historical average.

　　But even if EA didn't make as much from console and PC sales, Pachter said the publisher is still well situated to meet or beat its own revenue expectations thanks to a few factors. First of all, the recently concluded holiday season is the first one for which EA acquisition Jamdat will have an impact on the parent company's bottom line. Citing the mobile game publisher's $35 million contribution to EA's coffers in the previous quarter, Pachter "conservatively" estimates that it will add about $40 million to the company's third-quarter tally.

　　Pachter also expects EA to reap about $35 million in additional revenue as a result of the British pound and the euro gaining strength against the US dollar. As a result, hit games in Europe like FIFA 07 and Need for Speed Carbon wind up contributing more to the company's revenues once their take is converted to US currency.

　　Finally, Pachter believes EA could further improve its revenue figures by adjusting its reserves, the money it sets aside to cover price cuts and returns on unwanted inventory. The reserve funds are maintained by reducing reporting revenues, and Pachter notes that EA not only had fewer price cuts this year, but also more money in the reserves to start the third quarter than last year. As a result, he said, even if EA decided to match its record-high reserve amount, which Pachter calls "highly unlikely," it could likely do so by taking a smaller hit to its revenues for the quarter. Depending on how much EA decides to funnel into its reserves, Pachter estimates the company could boost its revenues for the quarter by anywhere from $35 million to $90 million.

　　As of press time, EA shares were trading up more than 2 percent, jumping $1.13 to $51.50. Pachter expects the publisher to announce its third-quarter results early next month.