Electronic Arts cutting 1,100 jobs
Move spurred by lower-than-expected holiday resultsNEW YORK -- Shares of Electronic Arts fell in after-hours trading Tuesday after the video game giant said it is eliminating 1,100 jobs, or 11% of its staff, after holiday-season results came in well below its expectations.
The company reported a widened fiscal third-quarter loss, including charges, and significantly reduced its guidance for the full fiscal year.
EA cut its fiscal year 2009 revenue estimate to $4.2 billion-$4.35 billion, from $4.9 billion-$5.15 billion, because of weaker-than-expected sales; its decision to release certain titles, including "The Sims 3" and "The Godfather 2," in fiscal 2010 rather than in fiscal 2009; and the strengthening U.S. dollar.
The company also now expects a fiscal-year loss of $3.29 per share to $3.56, wider than previously feared.
For the quarter ending Dec. 31, Redwood City, Calif.-based EA recorded a loss of $641 million, including a $368 million impairment charge related to its wireless business and a $244 million charge related to deferred tax assets. In the year-ago period, it had reported a loss of $33 million.
Revenue rose $151 million to $1.65 billion, driven by sales of such game titles as "FIFA 09," "Rock Band 2," "Need for Speed Undercover" and "Madden NFL 09."
As part of its cost-cutting moves, EA said it will close 12 facilities, narrow its product portfolio and cut other variable costs. It expects to incur restructuring charges, including severance, of $65 million-$75 million, to be recorded during the next year.
"Given our recent performance and the current economic environment, we are aligning our cost structure with a lower projection of revenue, resulting in approximately $500 million of operating expense reductions in fiscal 2010 as compared with our previous plans," CFO Eric Brown said.
Before the earnings update, EA shares had closed up a bit after hitting a new 52-week low intraday.