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Electronic Arts Results Top Estimates; Outlook Disappoints

Video-game publisher Electronic Arts Inc. (EA: Quote) said Monday after the markets closed that its fourth quarter profit more than doubled from last year, helped by strong growth in digital revenue.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue.

However, the company gave a disappointing outlook for the first quarter, sending its shares down by more than 9% in after hours trading.

Electronic Arts shares are currently losing 8.3% in after hours trading after closing the day's regular trading session at $15.13, up a penny. The shares trade in a 52-week range of $14.48 to $26.13.

For the fourth quarter ended March 31, 2012, the Redwood City, California-based company reported net income of $400 million or $1.20 per share, compared to $151 million or $0.45 per share for the year-ago quarter.

Excluding the impact of the change in deferred revenue and other items, adjusted net income for the fourth quarter was $56 million or $0.17 per share, compared to $83 million or $0.25 per share in the prior year quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.16 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Net revenue for the fourth quarter rose 26% to $1.37 billion from $1.09 billion a year ago, while adjusted net revenue for the quarter fell 2% to $977 million from $995 million last year due to a reduction in the number of package goods titles in the quarter. Twenty-three had a consensus revenue estimate of $958.54 million for the fourth quarter. "We are proud to report a strong quarter and a fiscal year highlighted with $1.2 billion of digital revenue," said Chief Executive Officer John Riccitiello. "In the coming year, we break away from the pack, with a very different profile than the traditional game companies and capabilities that none of our new digital competitors can match." For the fourth quarter, the company had forecast net revenue of $1.425 billion to $1.475 billion, adjusted net revenue of $925 million to $975 million, earnings of $1.45 to $1.59 shares and adjusted earnings of $0.10 to $0.20 per share.

Net digital revenue for the quarter nearly doubled to $419 million from $211 million a year ago, while net publishing packaged goods and other revenue rose 11% to $926 million from $838 million last year.

Looking forward to the first quarter, the company forecast net revenue of about $950 million, adjusted net revenue of about $500 million, earnings of $0.40 to $0.48 per share and adjusted net loss of $0.45 to $0.40 per share. Analysts currently expect the company to report a loss of $0.33 per share on revenue of $577.91 million for the first quarter.

For the fiscal year 2013, the company forecast net revenue of about $4.075 billion, adjusted net revenue of about $4.300 billion, net loss of $0.36 to $0.16 per share and adjusted earnings of $1.05 to $1.20 per share.

Analysts currently expect the company to earn $1.12 per share on revenue of $4.17 billion for the fiscal year 2013.

"Digital growth drove our margins in fiscal 12 and we project this trend will continue in fiscal 13," said Interim Chief Financial Officer Ken Barker. "We saw more than 20 percent non-GAAP diluted EPS growth in fiscal 12, and are guiding to more than 30 percent growth in fiscal 13 based on the midpoint of our guidance."

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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