SAN FRANCISCO (Reuters) - Video game publisher 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 to cut costs.
The publisher of “Madden” football and “Need for Speed,” whose shares fell 2 percent, also plans to narrow its product portfolio to focus on titles with higher margin opportunities.
EA will pare jobs and close several facilities to save $100 million a year. Chief Financial Officer Eric Brown told Reuters the cuts were targeted at research and development and corporate functions.
“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.
Sales in the quarter were helped by the launches of “FIFA 10,” “Madden NFL 10,” and “The Beatles: Rock Band,” EA said.
Earlier on Monday, EA acquired privately held Playfish for $275 million in cash plus other considerations, as the company moves into the growing social gaming sector. <ID: nN09260996>
EA and other video game publishers are heading into the all-important holiday season facing serious concerns from analysts and investors about spending by anxious consumers.
Price cuts on home gaming consoles have failed so far to juice game sales, and Activision last week had cautious comments about the outlook for the holidays.
In the United States, overall video game industry sales are down 13 percent this year, according to industry tracker NPD.
EA’s chief rival Activision Blizzard Inc (ATVI.O) will launch its “Call of Duty: Modern Warfare 2” on Tuesday, in the most anticipated video game launch of the year.
EA forecasted full-year earnings per share at 70 cents to $1, excluding items, on non-GAAP revenue of $4.2 billion to $4.4 billion.
Wall Street is expecting earnings of 89 cents a share on revenue of $4.28 billion.
“The guidance is in line with the Street ... but the bad news is it’s still going to be tough to make and it turns out that the company has not been reorganized yet, they still have some ways to go,” said Hudson Square Research analyst Daniel Ernst.
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.
Shares of Redwood City, California-based Electronic Arts closed at $19.53 on the Nasdaq but fell to $19.14 in extended trade.
Reporting by Gabriel Madway; Tiffany Wu and Bernard Orr