Electronic Arts Q2 Net Loss Widens; To Cut 1500 Jobs

11/9/2009 5:54 PM ET

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(RTTNews) - Video-game publisher Electronic Arts Inc. (ERTS: News ) said Monday after the markets closed that its second quarter loss widened from last year, as revenue dropped mainly because of revenue deferral related to certain online-enabled packaged goods games and digital content. The company's non-GAAP earnings per share for the quarter also came in below analysts' expectations. Additionally, the company said it will close several facilities and cut about 1500 jobs as part of a plan that will reduce annual costs by at least $100 million a year.

The Redwood City, California-based company reported a GAAP net loss for the second quarter of $391 million or $1.21 per share, compared to a GAAP net loss of $310 million or $0.97 per share for the year-ago quarter.

Excluding the impact of the change in deferred revenue and other items, non-GAAP net income for the second quarter was $19 million or $0.06 per share, compared to a non-GAAP net loss of $20 million or $0.06 per share in the prior year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.07 per share for the second quarter. Analysts' estimates typically exclude special items.

GAAP net revenue for the second quarter, which includes the impact of deferred revenue adjustments, fell 12% to $788 million from $894 million in the year-ago quarter.

EA had a net revenue deferral of $359 million in the second quarter related to certain online-enabled packaged goods games and digital content, as compared to $232 million in the second quarter of last year.

Non-GAAP net revenue for the quarter increased 2% to $1.15 billion from $1.13 billion a year earlier. Twenty-five analysts had a consensus revenue estimate of $1.13 billion for the second quarter.

The company said second quarter sales were driven by the launches of FIFA 10, Madden NFL 10, The Beatles: Rock Band, Need for Speed SHIFT and NCAA Football 10.

"EA is performing well, with quality, sales and segment share up so far this year," said John Riccitiello, Chief Executive Officer. "We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses."

EA was the no. 1 publisher in North America and Europe fiscal year to date, with 21% segment share - up four points. The company had had four of the top-ten games in both North America and Europe.

EA said it will close several facilities and cut about 1500 jobs as part of a plan to narrow its product portfolio to provide greater focus on titles with higher margin opportunities.