Electronic Arts Inc. (ERTS) was down in the after-hours session by over 9% on the heels of the gaming publisher's Q3 report. Non-GAAP sales were off by over 20%. Adjusted income came in at 33 cents per share. This was two cents higher than expectations according to my earnings preview, but a lot less than the 56 cents per share earned in the comparable frame.

The press release mentions the lower quantity of titles released during the holiday season as being a driver of the decline in revenue (a tough European market was also cited). That may be, but it doesn't absolve EA of its fundamental challenges.

Electronic Arts (ERTS), a software maker whose colleagues include Activision Blizzard (ATVI), Microsoft (MSFT), Nintendo (NTDOY) and Sony (SNE), will be reporting third-quarter numbers on Monday, Feb. 8, after the market closes up shop. This is going to be an interesting one.

I doubt there are many market watchers out there who aren't aware of the problems in the video game industry; 2009 was not the best of years for the sector, and investors are hoping that 2010 will execute a rebound. However, EA has specific fundamental problems. The declines seen in its share price cannot be solely sourced to the macro conditions of the current console cycle.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Apple Inc. (AAPL) posted its highest quarterly revenue ever, easily beating estimates, as iPhone sales doubled.
• Boeing Co. (BA) swung to a larger-than-expected Q4 profit but guidance fell short of analysts' estimates.
• Chevron Corp. (CVX) fell short of analysts' earnings estimates for Q4, sending shares lower.
• Cisco Systems Inc. (CSCO) shares rose after optimistic statements by the CEO ahead of Q2 results.
• Eastman Kodak Co. (EK) shares surged after it beat Q4 expectations by a wide margin and cash flow improved.
• Ford Motor Co. (F) reported its first annual profit in four years due to cost-cutting and improved market share.
• Halliburton Co. (HAL) reported lower Q4 earnings but beat estimates by a penny, and revenue also fell.

Nintendo (NTDOY), the power behind the Wii console and the DS handheld, and a feared competitor in the corporate eyes of both Sony (SNE) and Microsoft (MSFT), released earnings to the market this week. According to Bloomberg, the gaming giant experienced a better than 20% contraction in operating profit in the last quarter.

However, net profit rose over 80% because of currency issues. This was pretty cool, since the effect of the yen had been a previous concern. Also cool was the fact that Nintendo came in ahead of estimates.

Have you ever had one of those days? Yeah, you've had 'em. I'm having one right now. I cannot believe how wrong my thesis on GameStop (GME) turned out to be. Wrong, wrong, wrong.

I honestly thought things were going to be different today. The video-game retailer would report its holiday sales and I would see a pop in my shares. I would have the opportunity to sell out at a nice price above my cost basis. A cost basis, by the way, that had been severely challenged soon after I opened the position.

Right now, like many individual investors, I am thinking about the coming year on Wall Street. What moves should I make? What stocks should I look at? Specifically: How should I position my portfolio?

One company I am almost certain to get rid of is Activision Blizzard (ATVI). I reserve the right to change my mind on this, but data on the video game industry point to a deterioration in the fundamentals. Many headlines throughout the year have trumpeted the fact that the console cycle is aging, and that demand for high-end systems has been satiated.

The holidays have ended, and the real sales have begun. Those choosing to sacrifice sentimentality for savings found retailers only too willing to help, as prices were slashed in the wake of the Christmas rush. Recipients of gift cards stand to see their purchasing power extended, as well, now that redemption time has arrived, and retailers are looking to squeeze in any extra sales they can to pump up their top lines before the books close on the fiscal year, which, for many, comes at the end of January.

Toys "R" Us has offered a deal on Nintendo (NTDOY) Wii games, with the second coming at half price, and Target (TGT) is nearly halving the price of wine glasses and dropping the tag on an argyle women's sweater by nearly a third. Walmart (WMT), which kicked off its cuts at the end of September, is throwing a $50 gift card on top of any Microsoft (MSFT) Xbox 360 buy.

Take-Two Interactive (TTWO), a video game publisher whose competitors include Activision Blizzard (ATVI) and Electronic Arts (ERTS), actually held up well Thursday after the company issued its Q4 report. I was honestly expecting a sell-off after the news. Why? The video game industry just isn't popular these days, so I figured the market would have found some excuse to send the shares packing. To my surprise, Take-Two gained over 1.8% in the regular session and then another 3% in the after-hours following the release.

Revenues increased 6%, but the action was in the per-share profit line. On an adjusted basis, Take-Two brought home 9 cents per share versus 2 cents per share in the fourth quarter of 2008. But I don't think the market cared too much about the data. After all, guidance for Q4 had already been announced near the beginning of the month. At that time, the stock was punished for the bad outlook and the upcoming GAAP loss. And I mean really punished. It lost 30% of its value at one point.

Does it seem to you like the entire video game trade is unwinding like a venomous snake, ready to plunge its fearful fangs into any individual foolish enough to invest in the sector? I've already written about my unfortunate timing related to GameStop (GME), and I've covered the bad news surrounding console giant Nintendo (NTDOY). What's next in the stream of negative headlines?

How about Take-Two Interactive (TTWO)? That stock was down 30% in afternoon trading at the time of this writing. 30%! According to The Wall Street Journal (subscription required), management issued some poor guidance that has shaken the confidence of market players. Add to that the general state of the retail environment, and you've got yourself a decidedly awful combination.

The video-game sector is getting scary. We've all been hearing reports about slowing sales and stagnant stock prices in the industry. Wait, did I just say stagnant stock prices? How about plunging stock prices?

I myself have been hit by bad news in this area. Earlier today, Wal-Mart Stores, Inc. (WMT) fired a shot at competitor GameStop (GME). Looks like some kind of pricing war could erupt. Great for consumers, bad for my portfolio! I am currently in a trade with GameStop, and I am not happy.

I purchased two stocks this week. I hope I was correct in buying them. As we all know, the Thanksgiving holiday period isn't always the best time to purchase shares of companies since trading volume is usually low and price action might be misleading. Nevertheless, I did what I did, and I'll tell you why.

First up, I bought Coca-Cola (KO). Why did I buy some of PepsiCo's (PEP) major competitor? This was the easier of the two decisions. I have a long-term position in Coke, so I wasn't so worried about a little bad timing. I dollar-cost-average every dividend check back into the stake, thus improving my price basis each and every quarter.

GameStop (GME) posted what I thought was a mediocre third quarter. Total sales went up about 8%, and earnings per share increased a few pennies to 31 cents. When you think video games, you think growth. That doesn't feel like growth, does it? Not the kind that sends a stock to the moon, certainly. Furthermore, same-store sales saw a decrease of 7.8%, driven by lackluster hardware transactions. Indeed, we may be hitting a point in the console cycle where the demand for systems from Sony (SNE), Microsoft (MSFT), and Nintendo (NTDOY) has essentially been satiated.

Here's the big question on the mind of traders: unimpressive Q3 or not, should GameStop be bought now?

Morale has plunged among military personnel in Afghanistan as a result of record violence in the war, according to the U.S. Army. A battlefield survey found that the situation is particularly problematic for soldiers on their third and fourth combat tours, and junior enlisted soldiers are most likely to experience marital problems because of deployment. Though it's not a complete solution, the study did find that limited doses of technology – either through video games or internet access – can help.

The study, obtained by NBC News, revealed that more than 20% of soldiers are experiencing combat stress, and half of them are having difficulties getting professional help. Combat Stress units in Afghanistan, the report says, are "undermanned," and this type of unit has no presence in the southern part of Afghanistan, where most of the combat is taking place.

While the big news today may be the release of Activision Blizzard's (ATVI) new Call of Duty title, there's other stuff going on in the world of video games for investors to ponder. Electronic Arts (ERTS) issued its Q2 report yesterday after the bell. The numbers weren't too bad, but the market was not excited at all by them, probably because it knows that EA still has a lot of work to do in terms of better positioning itself for the future.

Adjusted revenues were up a scant 2%. Earnings per share, excluding items, actually showed a profit of 6 cents. This was a lot better than the loss of 6 cents per share seen in the year-ago frame. The company also managed to generate a small amount of cash from operations in the quarter instead of using a whole bunch like it did last time around.

Activision Blizzard (NASDAQ: ATVI) published third-quarter results on Thursday after the bell. I can't say I was wholly taken with them. I know the best is probably yet to come once the Christmas shopping season really gets under way, but I was a little disappointed that the company saw a decline in adjusted profit.

Excluding items, Activision Blizzard made 4 cents per share this quarter versus the 7 cents per share made in last year's similar period. Well, did I say I was a little disappointed? Make that a lot disappointed. After all, this is supposed to be the publisher with the best pipeline on the block, the one with the Guitar Hero franchise and a great portfolio of licensed intellectual properties.