Electronic Arts posts loss, to cut jobs
SAN FRANCISCO (Reuters) - Electronic Arts Inc (ERTS.O) posted a wider quarterly loss and said it would cut about 1,500 jobs, or about 17 percent of its workforce, in another round of restructuring for the video game publisher.
The company, whose shares fell 2 percent in after-hours trade, also plans to narrow its product portfolio to focus on higher margin games and said it expects to publish fewer than 40 titles next fiscal year, down from around 60 last year.
Like its rivals, EA expressed concern about the all-important holiday season, saying retailers remain cautious and consumers are not showing up consistently. EA lowered its 2009 industry outlook for packaged good software sales.
The company's chief rival, Activision Blizzard Inc (ATVI.O), will launch its "Call of Duty: Modern Warfare 2" on Tuesday, in the most anticipated game launch of the year.
EA forecast full-year earnings per share at 70 cents to $1, excluding items, on non-GAAP revenue of $4.2 billion to $4.4 billion. Analysts, on average, are expecting earnings of 89 cents a share on revenue of $4.28 billion.
Hudson Square Research analyst Daniel Ernst said EA's fiscal 2010 outlook is in line with Wall Street forecasts, but he believed the company will have a hard time making it.
"They started this year making the point 'hey we have the restructuring behind us, we're leaner, we're more focused,' and here they are laying off another 1,500 employees," Ernst said.
EA, which cut 11 percent of its workforce last year, plans to pare jobs and close several facilities to save $100 million a year. Chief Financial Officer Eric Brown told Reuters the cuts were targeted mainly at research and development and publishing support, but he declined to give specifics on which titles will get the ax.
"We're cutting the projects and the support activities that don't make economic sense and freeing up more resources ... to push our key titles even harder," Brown said in an interview.
PLAYFISH DEAL
Many of EA's major releases, including "FIFA 10," "Madden NFL 10," and "The Beatles: Rock Band" hit stores in the September quarter, which helped its quarterly results edge by Wall Street's sales estimates.
EA reported a net loss of $391 million, or $1.21 a share, in its fiscal second quarter, ended September 30, versus a year-ago net loss of $310 million, or 97 cents a share.
Excluding items, the company earned 6 cents a share, a penny below the average analyst estimate of 7 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 12 percent to $788 million, while non-GAAP revenue -- which includes deferred sales -- came in at $1.15 billion. Wall Street was expecting revenue of $1.14 billion.
EA said earlier on Monday it acquired privately held Playfish for $275 million in cash plus other considerations, as the company moves into the growing social gaming sector. ID: nN09260996 Continued...
