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The Omniscient
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Jan 27, 2005, 11:08 AM
Post #1 of 1
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Electronic Arts Profits Decline in 3rd Quarter
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Electronic Arts reported lower revenue and profit for its third fiscal quarter, but the company beat Wall Street's expectations, thanks to strong sales of its hit video games. EA's net income was $375.1 million for the quarter ended Dec. 31, down 4 percent from $392.3 million a year earlier. Earnings per share were $1.18, down from $1.26 a share the previous year. Not counting one-time items, EA reported earnings of $1.23 a share, well above $1.18 a share that analysts expected, according to Thomson Financial.
The company had a stronger-than-expected quarter but lacked holiday blockbusters such as Take-Two Interactive's Grand Theft Auto: San Andreas or Microsoft's Halo 2. A shortage of Sony PlayStation 2 and a fierce price war in sports video games also put a damper on sales. The company's profit suffered somewhat because it slashed prices on its sports titles in response to Take-Two's attempt to gain market share with low-priced sports games. Strengthening its football franchise, EA recently struck exclusive multiyear deals with ESPN and the National Football League.
EA said it expects 2005 sales to grow as much as 5 percent for the North American video-game industry because of sales related to the launches of Nintendo's DS and Sony's PlayStation Portable handheld game systems. Normally, analysts would expect sales to slow down because the current consoles have been on the market for nearly five years.
EA closed the year with 5,669 employees, up 25 percent from a year earlier. Jenson said the company is investing heavily in its ability to make games for the next generation of consoles that will be launched this year or in 2006. But he noted the company expects hiring to slow.
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