Electronic Arts Announces Losses, Hopes for Better Times

Tuesday, November 10, 2009

Staff cuts coming

Electronic Arts has announced that it did not return to profitability in the last fiscal quarter, saying that its losses have reached 391 million dollars for the last three months. In the same period of 2008, the publisher, which is going through a tough restructuring process, precipitated by the worldwide economic crisis, only reported a loss of about 210 million.

In addition to this, when the Generally Accepted Accounting Principles are used, the company reported a loss of revenue of about 12%, reaching 788 million dollars. It's weird to note that internal accounting at Electronic Arts shows the revenue actually growing, reaching a company record of 1.147 billion, better than during the same period of last year.

John Riccitiello, who is the chief executive officer of Electronic Arts, has said “EA is performing well, with quality, sales and segment share up so far this year. We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses”.

Electronic Arts also implies that it will make a profit in the two coming quarters, with the big Christmas shopping season and a good line up attracting more and more gamers to the titles it offers, but that it will take a loss for the overall 2010 fiscal year, which is set to end on March 31. However, EA seems not to be worried as it also announced having bought Playfish, a company mostly oriented toward casual gaming, for the sum of 300 million dollars.

The publisher is expanding through acquisition and, at the same time, it is shrinking internally. About 1,500 people are set to be laid off before March next year, in a move which Electronic Arts hopes will shave about 100 million dollars from its operating costs. It's still not completely clear which videogame projects and which studios will be mostly affected.

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