Barry
Mr. Do It All
May 7, 2005, 6:57 PM
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EA 4th Quarter Results = Loss
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Quarterly profits at Electronic Arts Inc. plunged 91 percent because of withering competition and disappointing sales of its most popular video games, and executives said the company will likely lose money in the current quarter. Shares of the world's largest video-game software maker fell $5.96, or 11.3 percent, in after-hours trading. The company makes popular sports and action games, including "Tiger Woods PGA Tour," "Madden NFL Football" and"GoldenEye: Rogue Agent."
Electronic Arts announced fiscal fourth-quarter earnings Tuesday of $8 million, or 2 cents per share, compared with $90 million, or 29 cents per share in the same period of 2004. Excluding special items, such as employee stock-based compensation and some legal expenses, the software company earned $30 million, or 9 cents per share, down 61 percent from $77 million, or 25 cents per share, in the fourth quarter of 2004.
For the three months ended March 31, Redwood City-based Electronic Arts reported quarterly revenue of $553 million, down 7.5 percent from $598 million in the year-ago period. Before the earnings report was released, Electronic Arts shares rose 45 cents to close at $52.90 Tuesday on the Nasdaq Stock Market.
Profits for fiscal 2005 plunged nearly 13 percent. Electronic Arts reported fiscal year earnings of $504 million, or $1.59 cents per share, compared with $577 million, or $1.87 cents per share in fiscal 2004. Excluding special items, the company earned $543 million, or $1.71 per share, down 4 percent from $566 million, or $1.84 per share, in fiscal 2004. For the year that ended March 31, Electronic Arts reported quarterly revenue of $3.13 billion, up 5.7 percent from $2.96 billion in the year-ago period.
For the first quarter of fiscal 2006, Electronic Arts expects to post a loss between 22 cents and 28 cents per share, compared with a profit of 8 cents per share a year ago. Revenue is expected to fall to $300 million to $340 million from $432 million. Analysts were expecting the company to post a profit of 4 cents per share for the quarter on revenue of $450.2 million.
For all of fiscal 2006, the company expects to report a profit of $1.55 to $1.70 per share, with revenue rising 9 percent to 12 percent to $3.4 billion from $3.5 billion. Analysts were looking for net income of $1.71 per share on revenue of $3.39 billion. Company executives cited higher costs connected with purchasing licenses, growing competition and lower demand for games in anticipation of new set-top boxes, which are due to hit the market, as the reasons for its poor showing this quarter.
Makers of video-game players, such as Sony and Microsoft are due to
launch new video-game machines, and analysts say the public is
uninterested in spending money on games designed for outdated
equipment. Many consumers postpone new purchases until new versions of
their favorite hardware and software are released, said P.J. McNealy, a
senior analyst at American Technology Research.
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