EA Losses Widen 56 Percent
via forbes
Electronic Arts Inc.'s fiscal fourth-quarter losses widened by 56 percent because of industrywide disruptions caused by new gaming consoles, but the world's largest video game publisher surpassed tepid expectations on Wall Street.
EA said Tuesday that its net loss for the three months ended March 31 was $25 million or 8 cents per share, down 56 percent from a $16 million or 5 cents per share loss in the same quarter of 2006.
Not including one-time costs, EA earned $19 million, or 6 cents per share, down 56 percent from $43 million, or 14 cents per share in the year-ago period.
Revenue for the quarter was $613 million, down 4 percent from $641 million in the year-ago period.
Excluding charges, analysts surveyed by Thomson Financial expected Redwood City-based EA to earn $3.88 million, or 2 cents per share, on revenue of $586.97 million.
EA shares closed Tuesday at $52.94, up about 3 percent, or $1.57, on the Nasdaq Stock Market (nasdaq: NDAQ - news - people ).
On Feb. 26, CEO Larry Probst resigned, and John Riccitiello stepped in. Riccitiello joined Redwood City, Calif.-based EA in 1997, rising to president and chief operating officer before leaving in 2004 to co-found a venture capital fund.
Riccitiello is pushing EA toward mobile and online gaming.
One of the most highly anticipated upcoming titles in the gaming world is "Spore," by "Sims" developer Will Wright, considered one of the gaming industry's most creative artists.
Through its Maxis Software brand, EA had expected to release "Spore" - an interactive world where players evolve from single-celled organisms into intelligent beings - later this year. But on Tuesday, Riccitiello warned that the launch could be as late as spring 2008.
EA has also struggled to gain a bigger stake in the lucrative Asian market, dominated by Nintendo Co. (other-otc: NTDOY.PK - news - people ) Last quarter the company collected 53 percent of revenue from North America, 41 percent from Europe and only 6 percent from Asia.
The company is under intense criticism from gamers upset that EA has very few titles for "next generation" consoles that debuted late last year. Last quarter EA sold a negligible number of titles for the Sony (nyse: SNE - news - people ) PlayStation 3 and popular Nintendo Wii.
A third of the company's revenue in the quarter came from titles for the older PlayStation 2, and another fifth from titles for Microsoft (nasdaq: MSFT - news - people )'s Xbox and Xbox 360 consoles.
Problems ranging from the Spore delay to the paucity of PS3 and Wii titles indicate that the company is "innovation challenged," said David Gardner, co-founder of investment group The Motley Fool.
"Next gen is here now. Sony's late to the party, and EA is too," said Gardner, an avid gamer. "The best-case scenario is that Riccitiello brings his same past level of professionalism and savvy to this enterprise and turns it around in 2008."
EA expects revenue in the current quarter between $300 million and $360 million, and losses of between 56 and 66 cents per share. Excluding one-time expenses, it expects to lose between 34 and 40 cents per share.
The company last year earned $76 million, or 24 cents per share, down 68 percent from fiscal 2006, when the company $236 million, or 75 cents per share.
Excluding one-time charges in fiscal 2007, the company earned $247 million, or 78 cents per share, down 18 percent from $301 million or 96 cents per share in fiscal 2006.
EA expects fiscal 2008 revenue between $3.1 billion and $3.4 billion. The company expects to lose between 23 and 77 cents per share. Excluding one-time expenses, it expects to earn between 90 and $1.20 per share.
