EA results top expectations
SAN FRANCISCO (Reuters) - Electronic Arts Inc ERTS.O reported better-than-expected results, helped by cost cuts and strong sales of its "FIFA" soccer game.
The videogame publisher, which also posted good results in its small but fast-growing digital business, reaffirmed its full-year outlook, and its shares rose 5 percent after-hours on Tuesday.
Electronic Arts, which publishes such franchises as "Madden" football and "The Sims," has been struggling to convince wary shareholders that its turnaround efforts are on track. The company's stock is down around 25 percent from a year ago.
EA has slashed headcount and expenses, and narrowed its game portfolio to focus on high-earning titles.
"The research and development costs went down nicely. That's one of the concerns that shareholders have had," said Sterne, Agee & Leach analyst Arvind Bhatia.
"This is a step in the right direction," he said. "They had a beat and a reaffirm, and they managed to bring those costs down too."
Overall operating expense fell 13 percent. The company has roughly 1,200 fewer employees than it did a year ago.
Chief Executive John Riccitiello said EA's strategy and focus on efficiency are paying off.
"We are gaining share on half the number of titles we had three years ago," he said on a conference call with analysts.
"2010 FIFA World Cup South Africa" led EA's sales in the June quarter, which features the company's smallest release slate of the year.
EA still expects industrywide sales of traditional packaged games to fall 3 percent in 2010, but forecast growth of 7 percent overall when including revenue from digital content.
EA has made a big push into digital as it looks to expand sales of downloadable and mobile content, and capitalize on the red-hot market for games played on social networks like Facebook. The company's digital business rose 52 percent in the quarter.
EA is the top game publisher on Apple's iPhone and iPad, and last year it purchased Playfish, the No. 2 provider of social games. The company said it has 52 million monthly active users playing social games.
EA reported a net profit of $96 million, or 29 cents a share, in its fiscal first quarter, ended June 30, versus a year-ago net loss of $234 million, or 72 cents a share.
Excluding items, the company lost 24 cents a share, better than the average analyst estimate for a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.
Non-GAAP revenue came in at $539 million, ahead of Wall Street's target of $502.3 million.
The company affirmed its fiscal 2011 forecast for earnings, excluding items, of 50 cents to 70 cents a share on non-GAAP revenue of $3.65 billion to $3.9 billion.
For the current quarter, EA forecast a loss of 10 cents to 15 cents a share on non-GAAP revenue of $775 million to $825 million.
Wall Street is targeting a loss of 10 cents a share on revenue of $817 million.
Shares of Redwood City, California-based EA closed at $16.18 on the Nasdaq and rose to $17.01 in extended trading.