Once upon a time, John Riccitiello could do no wrong as CEO of Electronic Arts. All things must change. Now, Mr. Riccitiello can do no right. With high development costs and lower margins, plus no shortage of missed forecasts, Electronic Arts is suffering. Worse, EA just lowered their forecast for 2010. This represents the second straight year that EA has slashed its forecasts and this is making investors considerably unhappy…and when investors are unhappy, CEO’s are typically out of a job.

Despite the slashed forecast, analysts say EA has a solid roster of potential hit games due this year, and that its efforts toward online games and software for mobile devices like Apple Inc’s iPhone may pay off in the long run.

But they were far less forgiving of EA’s leadership under Riccitiello — the stock has declined about 70 percent during his tenure. Investors have expressed concerns that EA overpaid for social gaming concern Playfish last year and remember its failed hostile bid in 2008 for Take-Two.

Wedbush Morgan analyst Michael Pachter said the EA management team has “zero credibility” with investors, who he said have felt disregarded as EA has continued to miss its sales and earnings targets.

“Investors feel betrayed, and the comment I got most from investors today is ‘They don’t seem to care about investors.’ This management team is running out of room to underperform. I think investor tolerance is gone … they don’t get another year to turn around,” Pachter said.

Arvind Bhatia of Sterne, Agee & Leach added that the company has “consistently been underperforming,” and that there is going to be need for “some drastic action” at EA, whose high operating costs leave it with margins of 7 percent or less.

“For a $4 billion-plus company, that just isn’t acceptable,” he said. “Something is going to happen here — drastic costs cuts or them buying someone or getting sold — something has got to give in the next 12 to 18 months.”

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