Video game publisher Electronic Arts Inc. (ERTS) said Tuesday after the markets closed that fourth quarter loss widened from last year, hurt by investment losses and acquisition-related charges. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations so did its quarterly revenue. Additionally, the company forecast fiscal year 2009 earnings per share below analysts' current consensus estimate.
The Redwood City, California-based company reported a GAAP net loss for the fourth quarter of $94 million or $0.30 per share, compared to a GAAP net loss of $25 million or $0.08 per share for the year-ago quarter.
Excluding the effects of deferred revenue for online enabled packaged goods games, investment losses, acquisition-related charges and other items, non-GAAP net income was $30 million or $0.09 per share, compared to non-GAAP net income of $19 million or $0.06 per share in the prior year quarter.
On average, 21 analysts polled by First Call / Thomson Financial expected the company to report breakeven on a per share basis for the fourth quarter.
GAAP Gross profit for the quarter increased 76% to $665 million from $378 million a year ago, while non-GAAP gross profit rose 20% to $463 million from $386 million last year.
GAAP revenue for the fourth quarter jumped 84% to $1.13 billion from $613 million in the same quarter last year.
The company said it recorded a net benefit of $208 million related to the recognition of deferred net revenue for certain online enabled packaged goods games.
EA no longer charges for its service related to certain online enabled packaged goods games. As a result, the company recognizes revenue from the sale of these games over the estimated service period.
Excluding the effects of deferred revenue for online enabled games, non-GAAP revenue for the fourth quarter increased 50% to $919 million from $613 million a year earlier. Twenty analysts had consensus revenue estimate of $834.82 million for the company's fourth quarter.
Sales were boosted by new releases of ARMY OF TWO and Burnout Paradise as well as continued strong performance of Rock Band, the popular music stimulation game EA co-publishes with MTV Games.
For the fourth quarter, the company expected GAAP revenue of $925 million to $1.05 billion, non-GAAP revenue of $775 million to $850 million and GAAP loss of $0.33 to $0.52 per share. The company expected fourth quarter non-GAAP results to range between a loss of $0.03 per share and earnings of $0.02 per share.
GAAP revenue from North America surged 111% to $649 million in the fourth quarter from $307 million a year earlier, while International revenue increased 56% to $478 million from $306 million last year.
Total consoles revenue for the quarter rose 75% year over year to $522 million, while PC revenue fell 11% to $114 million.
Total mobility revenue increased 39% to $146 million and co-publishing and distribution revenue jumped 556% to $295 million.
EA makes most of its games for Sony's PlayStation 2 and PlayStation 3, Microsoft's Xbox 360 and Nintendo's Wii.
For the fiscal year 2008, the company reported a GAAP net loss of $454 million or $1.45 per share, compared to GAAP net income of $76 million or 40.24 per share for the fiscal year 2007.
Non-GAAP net income for the fiscal year 2008 was $339 million or $1.06 per share, compared to non-GAAP net income of $247 million or $0.78 per share in the prior year.
GAAP revenue for the fiscal year 2008 rose 19% to $3.67 billion from $3.09 billion last year. Non-GAAP revenue grew 30% from last year to $4.02 billion.
Analysts expected the company to earn $0.94 per share on revenue of $3.92 billion for the fiscal year 2008.
In fiscal 2008, EA was the number one publisher across all platforms in North America with 19% share and in Europe with 20% share.
"On balance, we're very pleased with our revenue growth, but not yet happy with our profit margins," said John Riccitiello, EA's Chief Executive Officer. "In fiscal 2009, we expect to deliver another $1 billion in revenue growth and to double our operating profit on the strength of our slate of titles."
For the fiscal year 2009, the company expects GAAP revenue of $4.9 billion to $5.15 billion and non-GAAP revenue of $5.0 billion to $5.3 billion.
The company also said it expects GAAP earnings of $0.25 to $0.52 per share and non-GAAP earnings of $1.30 to $1.70 per share for the fiscal year 2009.
Analysts currently expect the company to earn $1.73 per share on revenue of $4.59 billion for the fiscal year 2009.
EA did not provide any update on its proposed $2 billion takeover offer for rival Take-Two Interactive Software Inc (TTWO). Take-Two, publisher of highly successful videogame franchise "Grand Theft Auto IV," has rejected the $25.74 per share tender offer as too low. The tender offer expires Friday.
In February, EA made an unsolicited public offer of $26 per share for Take-Two, which promptly rejected the price as too low and said it would not entertain merger discussions until after the launch of "Grand Theft Auto IV" on April 29. Next month, EA commenced a tender offer to acquire all of the currently outstanding common shares of Take-Two for $26.00 per share in cash. EA has extended the tender offer twice.
On April 18, while extending its tender offer to May 16, the company lowered its offer price to $25.74 per share, citing dilution caused by a new management compensation package approved by Take-Two's shareholders.
Meanwhile, the "Grand Theft Auto IV" was released on April 29, and in the week after that, it sold more than six million copies and netted more than $500 million at retail.
In another development, EA last week filed papers with the Securities and Exchange Commission reporting that it has secured $1 billion in financing agreements should it go ahead with the Take-Two acquisition.
The vide game industry is becoming highly competitive, and companies are trying to own as much franchises as possible either through acquisition or tie ups.
One of EA's closest rivals, Activision Inc. (ATVI), is merging with the games unit of France's Vivendi SA to create Activision Blizzard Inc.
Given the performance of Take-Two's stock since the original EA bid, the industry scenario and EA's own performance, analysts feel that the combination will be in the best interest of both the companies.
EA shares, which are trading in the range of $43.62 to $61.62 over the past year, closed Tuesday's regular trading session at $54.57, up 30 cents. The stock is losing $2.02 or 3.70% in after hours trading.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.