Electronic Arts outlook disappoints, shares dive

SAN FRANCISCO (Reuters) - Electronic Arts Inc warned that fiscal 2011 earnings would miss Wall Street expectations, as it grapples with a lack of exciting new games after a succession of missed targets and restructurings.

The news sent shares of the U.S. video game publisher plunging 10 percent, after its current-quarter forecast also missed analysts' expectations on Monday, a month after it had updated its current 2010 fiscal year outlook.

"I don't understand how in four weeks things can change that much ... considering the lineup that they had. To come out with these numbers is shocking," said MKM Partners analyst Eric Handler.

EA forecast profit, excluding items, at 2 cents to 6 cents a share for the March quarter, on revenue of $800 million to $850 million. Analysts, on average, had forecast profit of 13 cents a share on revenue of $850 million, according to Thomson Reuters I/B/E/S.

And for the fiscal year ending March 2011, EA forecast earnings of 50 cents to 70 cents a share on revenue of $3.65 billion to $3.9 billion. Both lagged Wall Street's expectations for 74 cents and $4.07 billion.

EA Chief Financial Officer Eric Brown told Reuters in an interview the company had taken a "realistic approach" to its estimates. But he warned that industrywide sales of packaged goods software would slip 3 percent in 2010.

Early in January, EA cut its fiscal 2010 earnings per share forecast to a range of 40 cents to 55 cents, from 70 cents to $1.00. It also cut its revenue estimate for the year to a range of $4.13 billion to $4.2 billion, from $4.2 billion to $4.4 billion.

After that move, analysts said Chief Executive John Ritticiello's job was on the line, citing a failure to appease investors clamoring for higher margins and share price performance.

A DIFFICULT YEAR

EA has had a difficult year, slashing jobs and narrowing its game portfolio amid an industrywide slump in video game sales, but some analysts have said the company's game slate for early calendar 2010 is strong.

EA's pipeline for the March quarter included "Mass Effect 2," "Army of Two" and "Dante's Inferno."

Shares of the company gained about 11 percent in calendar 2009, lagging by far the 29 percent that rival Activision Inc chalked up over the same period.

Video game industry sales in the United States -- the largest market -- fell 8 percent in 2009 to $19.7 billion, and game software sales slid 11 percent. The economic downturn most impacted the industry's casual fans, with the music category particularly hard-hit.

The publisher of "Madden NFL" reported on Monday a net loss of $82 million, or 25 cents a share, in the fiscal third-quarter ended December 31, versus a loss of $641 million, or $2 a share, in the year-ago period.

Excluding items, EA earned 33 cents a share, versus the average analyst estimate of 31 cents a share.

Revenue fell 25 percent to $1.2 billion, while non-GAAP revenue came in at $1.35 billion. Wall Street was estimating $1.34 billion.

Shares of Redwood City, California-based EA closed at $17.49 on Nasdaq and fell 10 percent to $15.85 in extended trading.

(Reporting by Gabriel Madway; Editing by Richard Chang)