* Q1 loss narrower than Street; non-GAAP revenue beats
* Reaffirms FY 2011 outlook
* Good progress on cost cuts-analyst
* Shares up 5 pct after hours
(Adds CEO comment, details from report, updates shares)
By Gabriel Madway
SAN FRANCISCO, Aug 3 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
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
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
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
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
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.
(Reporting by Gabriel Madway; Editing by Matthew Lewis,
Richard Chang and Steve Orlofsky)