EA's holiday sales weaker than expected

By Barbara Ortutay

updated 8:57 p.m. ET Dec. 9, 2008

NEW YORK - Video game publisher Electronic Arts Inc. said Tuesday it expects revenue and earnings for fiscal 2009 to miss its prior outlook because of weaker-than-expected holiday sales. The company will also cut more jobs to reduce costs.

The Redwood City, Calif.-based publisher of games like the "Madden" football series and "Rock Band" said its sales in North America and Europe were below expectations.

The company does not plan to provide an updated forecast for the fiscal year, which ends in March, until it posts its third-quarter results in February.

In October, EA predicted adjusted earnings per share of between $1 and $1.40 for the year. It had lowered its estimates already because of the delay of the latest "Harry Potter" game. On this basis, analysts polled by Thomson Reuters are forecasting earnings of $1.16 per share.

The company's adjusted revenue forecast — which exclude deferred revenue for some online games — had been for $5 to $5.3 billion. Analysts are predicting sales of $5.06 billion.

The company also said at the time it plans to cut 6 percent of its work force, or about 500 to 600 jobs, across all functions and locations to lower costs. EA said Tuesday it is reducing its product portfolio for fiscal 2010, with more job cuts and facility consolidations. It did not say how many additional jobs would be affected.

While some of EA's holiday titles, such as "Dead Space" and "Left 4 Dead," have performed well, others, like "Need for Speed Undercover" "Mirror's Edge" and even the latest installment of the popular "Rock Band" franchise have not, according to analysts.

The company said many older titles have been selling below expectations.

Chief Executive John Riccitiello told analysts in a conference call EA plans to reduce costs, but also invest more in areas like marketing its hit games.

"We are cutting at the bottom of the range and planning to push our top titles more aggressively," he said.

EA's shares fell $1.92, or 9.9 percent, to $17.43 in after-hours trading. The stock had closed down $2.52, or 11.5 percent, at $19.35. The stock is down about 67 percent since the start of the year.

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