Shares of Electronic Arts tumbled Tuesday after the video game publisher said CEO John Riccitiello will step down later this month, raising concerns about the company's digital strategy.
EA (EA) stock was down 8% in late morning trading.
The company said late Monday that former CEO Larry Probst will serve as interim chief after Riccitiello leaves on March 30.
EA also warned that earnings and sales for the current quarter could come in at the low end of the guidance it offered in January. The company is scheduled to release its next quarterly report in May.
Riccitiello's decision to step down comes weeks after EA launched an updated version of its 23-year old city-building game, SimCity. More than 1 million games were sold at launch, and more than half of those sales were for the digital version.
But SimCity's debut was marred by technical difficulties, including problems downloading the game because demand overwhelmed EA's servers. After enduring the wrath of angry gamers, EA said it would give certain users a free game to make up for the glitch.
The episode highlighted concerns about EA's ability to adapt to changing trends in the industry as consumers increasingly favor games that can be downloaded on portable devices made by companies such as Apple (AAPL) and Google (GOOG).
EA has launched a platform called Origin that allows users to download games online and play them on PCs or mobile devices. But the company has not had a major hit in a while and some investors say it needs more than a new system to get ahead of the competition. EA is up against Call of Duty creator Activision Blizzard (ATVI) and Grand Theft Auto maker Take-Two Interactive (TTWO) at the top of the traditional video game heap.
In case you're still not convinced, here's a comment from someone claiming to represent the "video game nerds" of the world.
Despite all the negative sentiment, some traders said Riccitiello's departure could create an opportunity for EA to correct past mistakes.
Not a member yet?Sign up now for a free account