Electronic Arts Q3 forecast disappoints as "Medal" seen lagging
SAN FRANCISCO (Reuters) - Video game publisher Electronic Arts Inc forecast third-quarter earnings below Wall Street targets on Tuesday after its just-released "Medal of Honor: Warfighter" title failed to wow gamers ahead of a crowded holiday season.
Poor reviews for the latest installment in the first-person shooter franchise released last week and the postponement of its "NBA Live 13" will hurt current-quarter sales, analysts say. A clutch of new sports games, such as the popular "FIFA 13," did not seem able to take up the slack, they say.
"Pretty disappointing near-term outlook and an unrealistic fiscal 13 guidance view from management," National Alliance Capital Markets analyst Mike Hickey said.
Electronic Arts reported fiscal second-quarter earnings - excluding certain items - of 15 cents per share, beating the Street view of 11 cents per share.
But the company forecast third-quarter earnings in a range of 50 cents to 60 cents, lower than the Street's view of 71 cents, according to Thomson-Reuters I/B/E/S. It said it expects fiscal year 2013 earnings between $1 and $1.15 per share versus analysts' expectations of $1.05 per share.
"Our Q3 looks soft mostly due to 'Medal of Honor,'" Chief Executive John Riccitiello told analysts on a conference call.
The Redwood City, California-based company launched its racing game, "Need for Speed: Most Wanted," as part of its holiday pipeline on Tuesday.
Second-quarter earnings were driven largely by the success of sports titles like "Madden NFL 13," Chief Financial Officer Blake Jorgensen said in an interview.
The company is optimistic that "Medal of Honor: Warfighter" and "Need for Speed" will deliver in the back half of the fiscal year, Jorgensen said.
"FIFA 13" sold 7.4 million units over the four weeks since its late September launch, the company said. Jorgensen said the company's line up of sport games like "FIFA," "Madden" and its NHL hockey game "will continue to do well through the holidays."
The video game industry is seeing sluggish growth in sales of traditional video games as gamers increasingly migrate to games online or on mobile devices.
Electronic Arts has diversified its revenue stream by investing in digital and mobile game offerings. The company said its digital revenue was up 40 percent this quarter compared with last year.
As smartphones such as Apple Inc's iPhone5 and tablets like Google's Nexus 7 hit the market this holiday, Electronic Arts will continue to produce games across multiple platforms, Jorgensen said.
For the second quarter ended September 30, the company posted revenue of $711 million, compared with $715 million a year earlier. It reported a net loss of $381 million, or $1.21 cents per share, compared with $340 million, or $1.03 per share a year ago.
Adjusted revenue rose about 5 percent, to $1.08 billion, from a year earlier. That was in line with analyst estimates, according to Thomson-Reuters I/B/E/S.
Shares of Electronic Arts have fallen about 42 percent in the year to date. Stock markets were closed on Tuesday in the wake of Hurricane Sandy.
(Reporting By Malathi Nayak; Editing by Ciro Scotti and Chris Gallagher)