* 11 titles for 2014, "Star Wars" games to come later
* Shares up 8 pct as cost cuts add to bottom line
* Digital sales grew 45 percent
(Adds analyst and executives' comments, details of 2014 games)
By Malathi Nayak
SAN FRANCISCO, May 7 Electronic Arts Inc
forecast fiscal 2014 earnings above Wall Street's expectations
as cost cuts take hold and higher-margin digital sales
accelerate, lifting the video game publisher's stock 8 percent.
Electronic Arts, which like the rest of the industry is
struggling as players migrate to more casual games such as
"Angry Birds" on mobile devices, estimated fiscal 2014 profit,
excluding certain items, of $1.20 a share, beating an average
estimate of $1.10.
EA has been cutting staff and reorganizing studios in recent
months to embrace new game platforms, cut costs and adapt to
tougher market conditions. The publisher is preparing a new
slate of games - including the latest installment of its
"Battlefield" shooter game franchise - partly to take advantage
of next-generation video game consoles due later this year.
Digital revenue - from mobile games, online offerings and
other newer sales channels - rose 45 percent year-over-year to
$618 million, larger than EA's packaged goods business in the
fourth quarter ended on March 31.
EA shares rose to $19.88 in after-hours trading on Tuesday
after closing at $18.41 on Nasdaq.
"We've cut operating costs, sharpened our product focus, and
made strategic investments in next-generation consoles, mobile,
and PCs," EA Executive Chairman Larry Probst told analysts on an
Consumers have held back from buying hardware and software
as they await new versions of Sony Corp's
PlayStation and Microsoft Corp's Xbox expected later
"Their focus on margin expansion is impressive but they're
going to have to continue to deliver on that," Sterne Agee
analyst Arvind Bhatia said. "But so far, so good."
For fiscal 2014, the video game maker forecast revenue of $4
billion, in line with Wall Street's expectations, according to
"STAR WARS" IN THE MAKING
Weakness in the packaged games market dented revenue, but EA
recognized $120 million of deferred payments from its
"Battlefield Premium" service in the fourth quarter, Chief
Financial Officer Blake Jorgensen said in an interview.
For the latest quarter, total revenue declined to $1.2
billion from $1.37 billion a year ago. Adjusted revenue rose 6.4
percent to $1.04 billion over the same period, barely beating
analysts' average estimate of $1.03 billion according to Thomson
Net income fell to $323 million, or $1.05 per share, from
$400 million, or $1.20 per share, a year ago.
John Riccitiello stepped down as chief executive on March
30, after taking responsibility for missed operational targets.
Former CEO and Chairman Probst has been appointed executive
chairman as the company begins its search for the next CEO.
There's "no new news" on the search for EA's next CEO,
Jorgensen said. "The search continues."
EA's big 2014 release is "Battlefield 4," the new
installment from its hugely popular first-person shooter
franchise that is expected to release this fall.
"It would have been tougher for them this year had it not
been for 'Battlefield 4.' I think that accounts for most of the
growth and in the absence of that they would have had a flat to
down year," Bhatia said.
EA management on the earnings call cited 11 titles in the
company's 2014 lineup. These include sports game franchises such
as "Madden" and "FIFA," city-building simulation game "Sims 4"
for personal computers and "Plants vs. Zombies 2" from its
PopCap mobile game studio.
On Monday, Electronic Arts sealed a multi-year licensing
deal with Walt Disney Co, under which the video game
publisher will develop games for mobile devices, PCs and
consoles based on the "Star Wars" movies.
"Development is at least a year plus in timing so you won't
see anything in fiscal '14," Jorgensen said.
(Reporting by Malathi Nayak; Editing by Richard Chang)