(Adds analyst comment, details)
By Lisa Baertlein
LOS ANGELES May 8 Electronic Arts Inc.
ERTS.O posted a wider quarterly loss on Tuesday and forecast
adjusted profit this year would miss Wall Street targets as its
widely anticipated video game, "Spore," was delayed.
Shares of the world's biggest video game publisher fell
almost 3 percent in after-hours trade.
The company, which sells games like "Madden," "Need for
Speed" and "The Sims," forecast adjusted profit of 90 cents to
$1.20 per share for the year, compared with analysts' average
target of $1.31. It forecast a net loss for fiscal 2008.
Redwood City, California-based EA said it was no longer
counting on revenue from "Spore," a game where players build
organisms from scratch, in the fiscal year ending in March
2008, adding that the game could be delayed until fiscal 2009.
EA owns all the rights to "Spore," and profit margins on
the game should be 80 percent or higher, compared with around
30 percent for other upcoming titles like "Crysis" and
"Mercenaries 2: World in Flames," which EA is publishing with
partners, Wedbush Morgan analyst Michael Pachter said.
"'Spore' explains a lot of it," Pachter said of the
company's fiscal 2008 forecast miss. EA's investment in online
games explains the rest, he added.
Meanwhile, EA's results from the fourth quarter ended March
31 beat analysts average estimates calling for a profit
excluding items of 2 cents per share on revenue of $586.4
million, according to Reuters Estimates.
EA's net loss widened to $25 million, or 8 cents per share,
from $16 million, or 5 cents, in the year-earlier period.
Excluding items, the company earned 6 cents per share versus 14
cents in the year-earlier period.
Revenue fell 4 percent to $613 million from $641 million,
as the $30 billion global video game industry rebuilds its
audience on new consoles from Sony Corp. (6758.T) (SNE.N),
Microsoft Corp. (MSFT.O) and Nintendo Co. Ltd. 7974.OS
This fiscal year, Electronic Arts is booking one-half of
its revenue from games that can be played online via personal
computers and devices from Sony Corp. (6758.T) (SNE.N) over a
The company, under pressure from investors to deliver
stronger growth, said it expects that $300 million to $500
million in revenue that would have been booked in fiscal 2008
will be booked in fiscal 2009.
Excluding those deferrals, EA sees full-year revenue of
$3.1 billion to $3.4 billion.
EA's game release plan for this fiscal year includes a new
"Harry Potter" game and a title based on the hit cartoon, "The
Academy award winning director Steven Spielberg is working
on an all new game for Nintendo's Wii console, which continues
to sell out in stores.
"My sense is we can be faster and better focused on
capturing opportunities, increasing segment share and overall
growth," John Ricctiello, a former senior executive who
rejoined the company as chief executive in April, told analysts
in a conference call.
Warren Jenson, the chief financial officer, said Electronic
Arts continues to expect video game sales in North America and
Europe to rise 13 percent to 18 percent for calendar 2007.
Shares, which closed up 3.1 percent to $52.94 on Nasdaq,
slipped to $51.50 in extended trade following the company's
EA's stock fell 15 percent in 2005 as the industry began to
move to new console technology. The stock lost another 4
percent last year.
Before EA reported results, its shares had been trading at
39 times expected 2008 earnings. Activision Inc. (ATVI.O), its
closest U.S. rival, was trading at 36 times expected 2008