Question: I'm being told that Electronic Arts Inc. has great prospects, but its stock hasn't been all that great. What do you think? — S.R., via the Internet

It reigns as the world's largest game publisher by sales.

Yet many of its sales involve popular game sequels, such as "Harry Potter and the Order of the Phoenix" and annual versions of "Madden NFL," rather than innovative new titles.

Shares of Electronic Arts (ERTS) are up eight percent this year following declines of four percent last year and 15 percent in 2005. Although the company has a strong balance sheet and plenty of cash, in its recent first fiscal quarter it had a net loss of $132 million and revenue declined four percent.

Perhaps award-winning director and producer Steven Spielberg can supply inspiration. EA recently unveiled details of two original video games in development with Spielberg, one for the Nintendo Wii game console and the other for Sony PlayStation 3, Microsoft's Xbox 360 and personal computers.

CEO John Riccitiello wants EA and the entire video game industry, which is highly cyclical and dependent on a few hit games, to introduce new kinds of games, attract casual players and experiment with sales approaches.

Riccitiello in April returned to EA, where he once was president, after spending time with a venture capital fund. He quickly pulled together the widely scattered company into four business units, with fewer executives required to make decisions.

He also set out to attract top talent. The head of Microsoft Corp.'s Xbox division, Peter Moore, was hired to oversee EA's profitable sports-game business. The former president of Activision's publishing division, Kathy Vrabeck, was hired to lead a new casual-games division.

Following those moves, the analyst consensus rating of EA stock is "buy," according to Thomson Financial, consisting of eight "strong buys," 11 "buys," and 12 "holds."

EA has 10 new releases planned for the current fiscal year, including some specifically for Nintendo's Wii. The company has been criticized for not having enough Wii game titles.

The recent postponement of Take-Two Interactive Software Inc.'s "Grand Theft Auto IV" introduction from the holiday shopping season until sometime next year should help rival game firms. But EA has delayed the much-anticipated release of its "Spore" game as well.

Earnings are expected to increase 45 percent in its fiscal year ending in March 2008 and 71 percent the following fiscal year. Projected five-year annualized growth rate is 20 percent versus 13 percent forecast for the multimedia and graphics software industry.

Q. Is Baron Small Cap Fund still as good as it ever was? — R.H., via the Internet

It still seeks growth in non-traditional areas and tends to be light on technology, telecommunications and media.

It still favors firms with steady revenues, such as gaming companies and service providers. For example, Wynn Resorts Ltd. has been a favourite holding since that firm went public in 2002.

Portfolio manager Clifford Greenberg, in charge since the fund's inception in 1997, remains a thoughtful investor who has produced consistent returns and avoided bear market damage.

The only concern is that asset size is now nearly $3.5 billion, which means a loss of some maneuverability in small-cap stocks. It will have to invest in more mid-cap stocks to fill out its sizable portfolio.

Baron Small Cap Fund (BSCFX) is up 27 percent over the past 12 months and has a three-year annualized return of 17 percent. Both results rank in the top third of small growth funds.

"We give Baron Small Cap Fund a lukewarm recommendation and think shareholders in it should stick by it because we like the manager and strategy," said Kerry O'Boyle, analyst at Morningstar Inc. in Chicago. "However, we do have concerns for new investors because of the fund's asset size."

The fund had been closed to new investors but reopened a year ago.

Greenberg is a long-term investor in an asset category known for a short-term mind-set. He prefers small, fast-growing companies with sustainable growth for the next five to 10 years. This can include beaten-down companies and special situations.

He is assisted by two analysts and is in regular contact with the firm's founder, Ron Baron, and the analyst team.

Consumer services represents one-fourth of assets, with business services and industrial materials other concentrations. Among its top holdings are CB Richard Ellis Group Inc., SBA Communications Corp., Gaylord Entertainment Co., Wynn Resorts, American Tower Corp., SunPower Corp., FLIR Systems Inc., Brookdale Senior Living Inc. and Eagle Materials Inc.

This "no-load" (no sales charge) fund requires a $2,000 minimum initial investment and has a 1.33 percent annual expense ratio.

Q. Resolve this for us: Is a stock split a good thing or not? — K.G., via the Internet

Consider it a mildly promising development that doesn't actually increase the value of one's stock holdings.

Although not all companies feel this way, some firms will split their stock because they believe the price exceeds the amount that smaller investors are willing to pay for it.

So, if an investor owns 100 shares of a company trading at $100 a share and it declares a 2-for-1 split, the investor winds up owning 200 shares valued at $50 a share after the split. There's no increase in total value of the holdings.

"It basically represents a corporate decision to keep the stock price at a level that makes it easy for investors to buy 100 shares," said Paul Nolte, investment director for Hinsdale Associates in Hinsdale, Ill. "Sometimes companies have a stock price threshold, say $60 a share, so whenever it gets to that level they split it."

The potential positive is that studies have shown companies with a history of regularly splitting their shares tend to perform well, and that new investors often help give a stock a price run-up following a split. On the other hand, some firms declare reverse splits when their stock price has dipped too low.

(Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, P.O. Box 874702, Tempe, Ariz. 85287-4702, or by e-mail at andrewinv(at)aol.com.)

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