By Malathi Nayak
SAN FRANCISCO, March 18 Electronic Arts'
Chief Executive Officer John Riccitiello has resigned after six
years at the helm of the video games publisher, saying he held
himself accountable for missed operational targets.
The company behind the "Sims" and "Medal of Honor"
franchises on Monday warned investors that earnings in the
current quarter will be at the low end of, or slightly below,
its previously issued forecasts.
Riccitiello will step down from his post and leave the
company's board on March 30, after having overseen a
near-two-thirds loss in the company's market value since he
became CEO in April 2007.
EA and rivals like Activision Blizzard Inc have
seen growth fall off sharply as more gamers flock to free games
on social networks or on mobile devices. The biggest traditional
games publishers have tried to buy startups and invest in mobile
platforms but face intense competition from entrenched players
like Rovio or Zynga.
"We have fallen short of the internal operating plan we set
one year ago," Riccitiello said in a resignation letter filed
with the Securities and Exchange Commission. "EA's shareholders
and employees expect better and I am accountable for the miss."
In January, Electronic Arts slashed its fiscal 2013 earnings
forecast after a weaker-than-expected holiday quarter marked by
disappointing sales of its "Medal of Honor" title. It also
forecast non-GAAP revenue for the fourth quarter ending March 31
of about $1.025 billion to $1.125 billion.
EA's former CEO and chairman of the board, Larry Probst, has
been appointed as executive chairman as the company begins its
search for its next CEO, the company said.
The news of Riccitiello's exit did not come as a surprise,
Mike Hickey, an analyst at National Alliance Capital Markets,
Whether it has been the company's performance guidance, the
loss of key development talent or botched product launches,
Riccitiello has had "a track record of mis-executions," Hickey
"The stock that has underperformed encapsulates all of the
issues," Arvind Bhatia, an analyst at Sterne Agee said. "And
this most recent quarter was the straw that broke the camel's
Under Riccitiello's watch, the company grew its digital and
mobile games businesses. Analysts say the company's revenue from
mobile games has been a bright spot in recent quarters.
But the company has had high-profile slip-ups in recent
months. Its latest installment of the popular city-building game
"SimCity" - released earlier this month - was marred by server
glitches and angered gamers who could not access the game for
New game hardware could potentially boost sales in the
troubled video game sector, according to analysts. Consumers are
holding back from buying hardware and software as they wait for
rumored next-generation versions of Sony Corp's PlayStation and
Microsoft Corp's Xbox, expected later this year.
"We believe timing makes sense for a CEO transition at the
end of the fiscal year, and ahead of next generation console
launches and a strong second-half title lineup (Battlefield and
EA Sports)," analyst Colin Sebastian of R.W. Baird said in a
Electronic Arts' stock climbed 3.4 percent to $19.35 in
after-hours trade, from a close of $18.71 on the Nasdaq.