The video game publisher also announced plans to lay off 1,100 people, or about 11% of its total workforce, and close 12 facilities in an effort to reduce its costs. EA, the force behind big-name game franchises like "The Sims," "Madden NFL" and "Need For Speed," is struggling to improve its game offerings while coping with a slumping economy that is hurting the ability of consumers to buy high-end consoles and titles.
"Although this is difficult to take apart the macro and the micro, a significant portion of the miss relates to our own performance," EA chief executive John Riccitiello said on a conference call with analysts. "Clear and simple, our titles did not perform to our expectations."
However, shares of EA picked up more than 5% in after-hours trading Tuesday as investors reacted well to the cost-cutting plans and outlook for the next fiscal year.
"Investors are probably liking the 2010 forecast," said Todd Greenwald of Signal Hill Advisors. "But it's fairly optimistic. They are taking $500 million out of operating expenses and expecting to grow their earnings. They are certainly not setting the bar very low."
Greenwald called the results for the December quarter "horrible." The company reported a net loss of $641 million, or $2 a share, for the period compared to a net loss of $33 million, or 10 cents a share, for the same period the previous year.
Excluding charges related to stock options and other items, the company said it would have earned $179 million, or 56 cents a share, for the recent period.
Total revenue rose 10% to $1.65 billion. Net revenue - which includes deferred revenue from game sales - came in at $1.74 billion. The company said sales for the quarter were driven by titles such as "FIFA 09," "Rock Band 2," "Need for Speed: Undercover" and "Left 4 Dead."
Analysts were expecting earnings of 88 cents a share on revenue of $1.9 billion, according to consensus forecasts from Thomson Reuters.
The layoffs are part of the company's efforts to cut its costs as the economy slows and it faces more competitive pressures from within the video game business. EA said the layoffs area expected to result in charges between $65 million and $75 million over the next 12 months.
It hopes the cuts will help it shave about $500 million from its operating expenses for its 2010 fiscal year.
For that year, which ends in March of 2010, EA said it now expects non-GAAP revenue of about $4.3 billion. Analysts had been expecting revenue of $4.68 billion for the year. Earnings, excluding charges, are expected to come in at $1 per share compared to $1.09 per share predicted by analysts.
Riccitiello outlined plans to focus more of the company's resources on the Nintendo Wii, which has passed up the Xbox 360 and PlayStation 3 as the most popular of the next-generation gaming consoles. He said the company has a "spectacular slate" of titles for the Wii set for fiscal 2010, including a Tiger Woods golf title and more sports offerings.
Source : Market Watch
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
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