Electronic Arts Inc.'s fiscal third-quarter revenue fell 12%,
with a wider net loss, following a steeper-than-expected drop in
sales of games for older videogame consoles.
The Redwood City, Calif., videogame company on Tuesday also
lowered its fiscal year revenue projections to $3.52 billion, from
the $3.55 billion it projected in October. Factoring in items such
as deferred revenue, EA said it now expects $3.91 billion in sales,
down from an earlier projection of $4 billion.
Blake Jorgensen, EA's chief financial officer, said EA was
surprised by how quickly sales of games for aging Microsoft Xbox
360 and Sony PlayStation 3 consoles dropped, taking about $75
million of the company's expected results during the holiday
shopping season, and another $25 million off the company's guidance
for the current quarter.
The prior guidance was based on a belief that current-generation
product sales "would hold up longer, at least through the holiday
season, than it did," Mr. Jorgensen said. He cited market research
firm NPD, which said older console games dropped about 35% in
December, a data point he said EA's results roughly mirrored. But,
he said, sales of games for older consoles haven't come to a
screeching halt.
The drop off weighed heavily on EA's fiscal third quarter, ended
Dec. 31, during which the company counted net revenue of $808
million, down more than 12% from the $922 million it reported for
the same period a year prior. EA's net loss widened to $308 million
from $45 million a year prior.
Adjusting for items such as deferred revenue, EA said it tallied
about $1.6 billion in sales, up 33% from nearly $1.2 billion a year
prior. Profit also jumped to $1.26 a share, more than double the 57
cents reported last year.
For the current quarter, EA said it expects adjusted profit of
nine cents a share on sales of $800 million. Analysts on average
had expected earnings of 10 cents a share on about $827 million in
revenue, according to Thomson Reuters.
For the year, EA said it expects adjusted profit of $1.30 a
share, slightly above analyst expectations of $1.28 a share.
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