• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

EA Reports First Quarter Fiscal Year 2010 Results

Sadist

Member
The Sims 3 Sold 3.7 Million Copies

Wii Sales Doubled with Launch of EA SPORTS Active

Madden NFL 10 Available on August 14

REDWOOD CITY, Calif., Aug 04, 2009 (BUSINESS WIRE) — Electronic Arts Inc. (NASDAQ: ERTS) today announced preliminary financial results for its fiscal first quarter ended June 30, 2009.

Fiscal First Quarter Results (comparisons are to the quarter ended June 30, 2008)

GAAP net revenue for the quarter, which includes the impact of deferred revenue adjustments, was $644 million, as compared with $804 million for the prior year. During the quarter, EA had a net revenue deferral of $172 million related to certain online-enabled packaged goods games and digital content as compared with a net benefit of $195 million in the first quarter of the prior year.

Non-GAAP net revenue was $816 million, up 34 percent as compared with $609 million for the prior year. Sales were driven by launches of The Sims(TM) 3, EA SPORTS Active(TM), and Fight Night Round 4.

GAAP net loss for the quarter, including the impact of deferred revenue, was $234 million as compared with a net loss of $95 million for the prior year. GAAP diluted loss per share was $0.72 as compared with GAAP diluted loss per share of $0.30 for the prior year.

Non-GAAP net loss was $6 million as compared with a non-GAAP net loss of $135 million a year ago. Non-GAAP diluted loss per share was $0.02 as compared with a non-GAAP diluted loss per share of $0.42 for the prior year.

Trailing-twelve-month cash flow used in operations was $25 million as compared with cash flow generated from operations of $239 million a year ago. The Company ended the quarter with cash, cash equivalents and short-term investments of $1.8 billion.

“Good execution delivered better-than-expected financial results in the first quarter,” said John Riccitiello, Chief Executive Officer. “We are very pleased with the success of both The Sims 3 and EA SPORTS Active.”

“Our Q1 performance was driven by our previously announced cost-cutting initiatives and a strong frontline slate,” said Eric Brown, Chief Financial Officer. “We had a solid Q1 both top and bottom line and we are focused on delivering the balance of the year.”

Highlights (comparisons are to the quarter ended June 30, 2008)

* EA was the #1 publisher in North America and Europe in the June quarter. EA had four of the top-ten games in North America and Europe.

* EA launched five titles in the quarter that received a Metacritic rating of 80 or above, including: Fight Night Round 4, BOOM BLOX(TM) Bash Party, The Sims 3, Tiger Woods PGA TOUR(R) 10 and EA SPORTS Active. Calendar year-to-date, EA has nine titles rated at 80 or above.

* Four titles won Best of E3 awards: Mass Effect(TM) 2 won Best RPG; Fight Night Round 4 won Best Sports Game; Star Wars(R): The Old Republic(TM) won Best PC Game; Left 4 Dead 2 won Best Online Multiplayer.

* The Sims 3 was the #1 selling title at retail in Europe and North America combined for the quarter.

* EA SPORTS Active sold over 1.8 million copies in the quarter – making it EA’s best-selling Wii title ever.

* EA’s Wii share hit a record 21 percent in North America and was 13 percent in Europe – driven by EA SPORTS Active, Tiger Woods PGA TOUR 10, EA SPORTS Grand Slam(R) Tennis and Rock Band(R) 2 in partnership with MTV Games.

* EA Digital non-GAAP revenue $124 million – up 38 percent year-over-year.

* EA Mobile(TM), the world’s leading publisher of games for phones, delivered $50 million of non-GAAP revenue in the quarter – up 14 percent year-over-year.

* EA acquired J2Play, a leading social gaming company.

Business Outlook

The following forward-looking statements, as well as those made above, reflect expectations as of August 4, 2009. Results may be materially different and are affected by many factors, including: development delays on EA’s products; competition in the industry; the health of the economy in the U.S. and abroad and the related impact on discretionary consumer spending; changes in anticipated costs; expected savings and impact on EA’s operations of the Company’s cost reduction plan; consumer demand for console hardware and the ability of the console manufacturers to produce an adequate supply of consoles to meet that demand; changes in foreign exchange rates; the financial impact of potential future acquisitions by EA; the popular appeal of EA’s products; EA’s effective tax rate; and other factors detailed in this release and in EA’s annual and quarterly SEC filings.

Fiscal Year Expectations – Ending March 31, 2010

* GAAP net revenue is expected to be between $3.7 and $3.85 billion – consistent with the Company’s previously provided guidance.

* Non-GAAP net revenue is expected to be approximately $4.3 billion – consistent with the Company’s previously provided guidance.

* GAAP diluted loss per share is expected to be between $0.85 and $1.35 – adjusted from the Company’s previously provided guidance of $0.85 and $1.45.

* Non-GAAP diluted earnings per share are expected to be approximately $1.00 – consistent with the Company’s previously provided guidance.

* For purposes of calculating fiscal year 2010 GAAP loss per share, the Company estimates a share count of 323 million and for non-GAAP EPS, the Company estimates a share count of 325 million.

* Expected non-GAAP net income excludes the following items from expected GAAP net income:

* $450 to $600 million for the impact of the change in deferred net revenue (packaged goods and digital content),

* $210 million of estimated stock-based compensation,

* $55 million of amortization of intangible assets,

* $25 to $35 million of restructuring charges,

* $14M loss on lease termination and facilities acquisition, and

* ($152) million in the difference between the Company’s GAAP and non-GAAP tax expenses.

Conference Call

Electronic Arts will host a conference call today at 2:00 pm PT (5:00 pm ET) to review its results for the fiscal first quarter ended June 30, 2009 and its outlook for the future. During the course of the call, Electronic Arts may also disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number: (877) 627-6511, access code 220497, or via webcast: http://investor.ea.com.

A dial-in replay of the conference call will be provided until August 11, 2009 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available for one year at http://investor.ea.com.

*Non-GAAP Financial Measures

To supplement the Company’s unaudited condensed consolidated financial statements presented in accordance with GAAP, Electronic Arts uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Electronic Arts include: non-GAAP net revenue, non-GAAP gross profit, non-GAAP operating income (loss), non-GAAP net income (loss) and historical and estimated non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures exclude the following items, as applicable in a given reporting period, from the Company’s unaudited condensed consolidated statements of operations:

* Acquired in-process technology

* Amortization of intangibles

* Certain abandoned acquisition-related costs

* Change in deferred net revenue (packaged goods and digital content)

* Goodwill impairment

* Income tax adjustments

* Losses (gains) on strategic investments

* Loss on lease termination and facilities acquisition

* Loss on licensed intellectual property commitment

* Restructuring charges

* Stock-based compensation

Electronic Arts may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

Electronic Arts believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the Company’s performance by excluding certain items that may not be indicative of the Company’s core business, operating results or future outlook. Electronic Arts’ management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing the Company’s operating results both as a consolidated entity and at the business unit level, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the Company’s performance to prior periods.

In addition to the reasons stated above, which are generally applicable to each of the items Electronic Arts excludes from its non-GAAP financial measures, the Company believes it is appropriate to exclude certain items for the following reasons:

Amortization of Intangibles. When analyzing the operating performance of an acquired entity, Electronic Arts’ management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any allocations made for accounting purposes. Because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets (including acquired in-process technology and goodwill), when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of acquired intangible assets to its financial results. Electronic Arts believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.

In addition, in accordance with GAAP, Electronic Arts generally recognizes expenses for internally-developed intangible assets as they are incurred, notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, and acquired in-process technology, which is expensed immediately, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly, Electronic Arts believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that excludes the amortization of acquired intangibles.

Certain Abandoned Acquisition-Related Costs. Electronic Arts incurred significant legal, banking and other consulting fees related to the Company’s proposed acquisition and related cash tender offer for all of the outstanding shares of Take-Two Interactive Software, Inc.On August 18, 2008, the Company allowed the tender offer to expire without purchasing any shares of Take-Two and, on September 14, 2008, the Company announced that it had terminated discussions with Take-Two. The costs incurred in connection with the abandoned proposal and tender offer were outside the ordinary course of business and were excluded by the Company when assessing the performance of its management team. As such, the Company believes it is appropriate to exclude such expenses from its non-GAAP financial measures.

Change in Deferred Net Revenue (Packaged Goods and Digital Content). Electronic Arts is not able to objectively determine the fair value of the online service included in certain of its packaged goods games and online content. As a result, the Company recognizes the revenue from the sale of these games and content over the estimated online service period. In other transactions, at the date we sell the software product we have an obligation to provide incremental unspecified digital content in the future without an additional fee. In these cases, we account for the sale of the software product as a multiple element arrangement and recognize the revenue on a straight-line basis over the estimated life of the game. Internally, Electronic Arts’ management excludes the impact of the change in deferred net revenue related to packaged goods games and digital content in its non-GAAP financial measures when evaluating the Company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. The Company believes that excluding the impact of the change in deferred net revenue from its operating results is important to (1) facilitate comparisons to prior periods during which the Company was able to objectively determine the fair value of the online service and not delay the recognition of significant amounts of net revenue related to online-enabled packaged goods and (2) understanding our operations because all related costs are expensed as incurred instead of deferred and recognized ratably.

Goodwill Impairment. Adverse economic conditions, including the decline in the Company’s market capitalization and expected financial performance, indicated that a potential impairment of goodwill existed during the three months ended December 31, 2008. As a result, the Company performed goodwill impairment tests for its reporting units in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” and determined that goodwill related to its mobile reporting unit was impaired. As the Company excludes the GAAP impact of acquired intangible assets (such as goodwill) from its financial results when analyzing the operating performance of an acquisition in subsequent periods, Electronic Arts believes it is appropriate to exclude goodwill impairment charges from its non-GAAP financial measures.

Income taxes adjustments. The Company uses a fixed, long-term projected tax rate of 28 percent internally to evaluate its operating performance, to forecast, plan and analyze future periods, and to assess the performance of its management team. Accordingly, the Company has applied the same 28 percent tax rate to its non-GAAP financial results.

Losses (Gains) on Strategic Investments. From time to time, the Company makes strategic investments. Electronic Arts’ management excludes the impact of any losses and gains on such investments when evaluating the Company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. In addition, the Company believes that excluding the impact of such losses and gains on these investments from its operating results is important to facilitate comparisons to prior periods.

Loss on Lease Termination and Facilities Acquisition. During the second quarter of fiscal 2010, Electronic Arts completed the acquisition of its headquarters facilities in Redwood City, California pursuant to the terms of the loan financing agreements underlying the build-to-suit leases for the facilities. EA exercised its option to purchase the facilities concurrent with the maturity of those financing arrangements, which were extinguished by payment of the purchase price. The aggregate purchase price of the facilities was approximately $247 million in cash, which reflects the amount financed by the lessor under the leases. Electronic Arts expects to recognize in the second quarter of fiscal 2010 a pre-tax loss associated with this acquisition as the estimated fair value of the facilities is less than the $247 million purchase price by approximately $14 million. In addition, Electronic Arts will reduce its income tax valuation allowance by $35 to $40 million as a result of this lease termination and facility acquisition such that on an after-tax basis, Electronic Arts will incur a positive net income effect of $21 to $26 million from this transaction. Electronic Arts’ management will exclude the effect of this transaction when evaluating the Company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team.

Loss on Licensed Intellectual Property Commitment. During the fourth quarter of fiscal 2009, Electronic Arts amended an agreement with a content licensor. This amendment resulted in the termination of our rights to use the licensor’s intellectual property in certain products and we incurred a related loss of $38 million. This significant non-recurring loss is excluded from our Non-GAAP financial measures in order to provide comparability between periods. Further, the Company excluded this loss when evaluating its operating performance and the performance of its management team during this period and will continue to do so when it plans, forecasts and analyzes future periods.

Restructuring Charges. Although Electronic Arts has engaged in various restructuring activities in the past, each has been a discrete, extraordinary event based on a unique set of business objectives. Each of these restructurings has been unlike its predecessors in terms of its operational implementation, business impact and scope. The Company does not engage in restructuring activities on a regular basis or in the ordinary course of business. As such, the Company believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures.

Stock-Based Compensation. Electronic Arts adopted SFAS 123(R), “Share-Based Payment” beginning in its fiscal year 2007. When evaluating the performance of its individual business units, the Company does not consider stock-based compensation charges. Likewise, the Company’s management teams exclude stock-based compensation expense from their short and long-term operating plans. In contrast, the Company’s management teams are held accountable for cash-based compensation and such amounts are included in their operating plans. Further, when considering the impact of equity award grants, Electronic Arts places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants.

Video game platforms have historically had a life cycle of four to six years, which causes the video game software market to be cyclical. The Company’s management analyzes its business and operating performance in the context of these business cycles, comparing Electronic Arts’ performance at similar stages of different cycles. For comparability purposes, Electronic Arts believes it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of its core business.

In the financial tables below, Electronic Arts has provided a reconciliation of the most comparable GAAP financial measure to the historical non-GAAP financial measures used in this press release.

Forward-Looking Statements

Some statements set forth in this release, including the estimates relating to EA’s fiscal year 2010 guidance information under the heading “Business Outlook” contain forward-looking statements that are subject to change. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are preliminary estimates and expectations based on current information and are subject to business and economic risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause the Company’s results to differ materially from its expectations include the following: sales of the Company’s titles during fiscal year 2010; the general health of the U.S. and global economy and the related impact on discretionary consumer spending; fluctuations in foreign exchange rates; consumer spending trends; the Company’s ability to manage expenses; the competition in the interactive entertainment industry; the effectiveness of the Company’s sales and marketing programs; timely development and release of Electronic Arts’ products; the consumer demand for, and the availability of an adequate supply of console hardware units (including the Xbox 360(R) video game and entertainment system, the PLAYSTATION(R)3 computer entertainment system and the Wii(TM)); consumer demand for software for the PlayStation(R)2; the Company’s ability to predict consumer preferences among competing hardware platforms; the financial impact of potential future acquisitions by EA; the Company’s ability to realize the anticipated benefits of acquisitions; the seasonal and cyclical nature of the interactive game segment; the Company’s ability to attract and retain key personnel; changes in the Company’s effective tax rates; the performance of strategic investments; the impact of certain accounting requirements, such as the Company’s ability to estimate and recognize goodwill impairment charges and make tax valuation allowances; adoption of new accounting regulations and standards; potential regulation of the Company’s products in key territories; developments in the law regarding protection of the Company’s products; the Company’s ability to secure licenses to valuable entertainment properties on favorable terms; the stability of the Company’s key customers, and other factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2009. These forward-looking statements speak only as of August 4, 2009. Electronic Arts assumes no obligation and does not intend to update these forward-looking statements. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts. While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended June 30, 2009.

http://gamerinvestments.com/video-g...ports-first-quarter-fiscal-year-2010-results/
http://investor.ea.com/releasedetail.cfm?ReleaseID=401109
 

Evlar

Banned
BOMBS AWAY!

The Associated Press said:
Revenue Falls 20% as Electronic Arts Posts Loss
THE ASSOCIATED PRESS
Published: August 4, 2009

Electronic Arts, the video game maker, said Tuesday that its first-quarter loss was larger than a year ago, dragged by lower revenue.

But adjusted results have surpassed expectations because of the strong responses to the release of games like “The Sims 3” and “EA Sports Active.”

Electronic Arts, based in Redwood City, Calif., said it lost $234 million, or 72 cents a share, in the April-June period. That compares with a loss of $95 million, or 30 cents a share, in the quarter a year earlier.
http://www.nytimes.com/2009/08/05/technology/companies/05game.html?hpw
 

markatisu

Member
EA Reports said:
* EA’s Wii share hit a record 21 percent in North America and was 13 percent in Europe – driven by EA SPORTS Active, Tiger Woods PGA TOUR 10, EA SPORTS Grand Slam(R) Tennis and Rock Band(R) 2 in partnership with MTV Games.

Wow you mean you actually put forth a budget and effort and you see results.....shocking :lol
 

border

Member
234 million dollars lost. Where is all the money going here? It seems like all their games sell pretty well. Only Take2 seems capable of worse management -- imagine if they had merged!
 

Zhuk

Banned
You know something is wrong with a company when you can release a game that sells as much as Sims 3 does and still lose money.
 

Busaiku

Member
Repeating what I stated elsewhere:
What did EA release on PSP?
For them to be making more revenue on it than Wii and DS combined seems very weird.
EDIT - Nevermind, that's just their market share on the platforms.
 

Sonos

Banned
border said:
234 million dollars lost. Where is all the money going here? It seems like all their games sell pretty well. Only Take2 seems capable of worse management -- imagine if they had merged!

Tiger Woods, NASCAR, NFL, etc etc for games people care less and less to play.

Activision may sell more games now but they will never beat EA in brand image problems. EA you are still on top!!!
 

milanbaros

Member?
Sonos said:
Tiger Woods, NASCAR, NFL, etc etc for games people care less and less to play.

Activision may sell more games now but they will never beat EA in brand image problems. EA you are still on top!!!

I'm not sure what you are trying to say exactly but this years Tiger Woods will be the most successful ever.
 

Evlar

Banned
Stuff of interest to Sales-Age (bolded the really important bits):
Highlights (comparisons are to the quarter ended June 30, 2008)

* EA was the #1 publisher in North America and Europe in the June quarter. EA had four of the top-ten games in North America and Europe.

* EA launched five titles in the quarter that received a Metacritic rating of 80 or above, including: Fight Night Round 4, BOOM BLOX(TM) Bash Party, The Sims 3, Tiger Woods PGA TOUR(R) 10 and EA SPORTS Active. Calendar year-to-date, EA has nine titles rated at 80 or above.

* Four titles won Best of E3 awards: Mass Effect(TM) 2 won Best RPG; Fight Night Round 4 won Best Sports Game; Star Wars(R): The Old Republic(TM) won Best PC Game; Left 4 Dead 2 won Best Online Multiplayer.

* The Sims 3 was the #1 selling title at retail in Europe and North America combined for the quarter.

* EA SPORTS Active sold over 1.8 million copies in the quarter – making it EA’s best-selling Wii title ever.

* EA’s Wii share hit a record 21 percent in North America and was 13 percent in Europe – driven by EA SPORTS Active, Tiger Woods PGA TOUR 10, EA SPORTS Grand Slam(R) Tennis and Rock Band(R) 2 in partnership with MTV Games.

* EA Digital non-GAAP revenue $124 million – up 38 percent year-over-year.

* EA Mobile(TM), the world’s leading publisher of games for phones, delivered $50 million of non-GAAP revenue in the quarter – up 14 percent year-over-year.

* EA acquired J2Play, a leading social gaming company.
So EA's still #1 in the West, Sims is gigantique, EA dominates among Wii Third Party, and Mobile is up-and-coming. Guess I wasn't the only one to purchase iPhone Scrabble and Monopoly.
 

Kifimbo

Member
border said:
234 million dollars lost. Where is all the money going here? It seems like all their games sell pretty well. Only Take2 seems capable of worse management -- imagine if they had merged!

Would have been a lot worse if The Sims was release in March like it was supposed to and if Tiger Woods was launch at the end of the summer like it usually does.
 

Sonos

Banned
milanbaros said:
I'm not sure what you are trying to say exactly but this years Tiger Woods will be the most successful ever.

I am saying it is very expensive to pay for the rights to make these games. The only thing more expensive is MS paying for GTA4 dlc. dumbdumbdumb! ;_;
 

Vinci

Danish
Evlar said:
So EA's still #1 in the West, Sims is gigantique, EA dominates among Wii Third Party, and Mobile is up-and-coming.

Still amazing that they keep posting losses. My god, it's like the company has an internal injury and it can't figure out where all the red stuff is coming from.
 

AstroLad

Hail to the KING baby
Sonos said:
I am saying it is very expensive to pay for the rights to make these games. The only thing more expensive is MS paying for GTA4 dlc. dumbdumbdumb! ;_;
Yep, Exclusivity Premium in particular can be a bitch. Peter Moore himself has said as much.
 

Tiktaalik

Member
EA’s Wii share hit a record 21 percent in North America and was 13 percent in Europe – driven by EA SPORTS Active, Tiger Woods PGA TOUR 10, EA SPORTS Grand Slam(R) Tennis and Rock Band(R) 2 in partnership with MTV Games.

* EA Digital non-GAAP revenue $124 million – up 38 percent year-over-year.

* EA Mobile(TM), the world’s leading publisher of games for phones, delivered $50 million of non-GAAP revenue in the quarter – up 14 percent year-over-year.

This bodes well for the future. EA's focusing on and doing better in the growth markets.
 

szaromir

Banned
How many quarters in a row has EA been in the red? It really makes me wonder if they have prospects of becoming profitable anytime soon. I thought they actually could have achieved this time with the strong performance of their new titles and last year lay-offs, but no, still not an option. While their sports titles traditionally perform really well, I don't think their other titles consisting mostly of new IPs (Dante's Inferno, Brutal Legend) are surefire hits that can bring EA back into the black.
 

gerg

Member
szaromir said:
How many quarters in a row has EA been in the red? It really makes me wonder if they have prospects of becoming profitable anytime soon. I thought they actually could have achieved this time with the strong performance of their new titles and last year lay-offs, but no, still not an option. While their sports titles traditionally perform really well, I don't think their other titles consisting mostly of new IPs (Dante's Inferno, Brutal Legend) are surefire hits that can bring EA back into the black.

As others have said, EA's problems are deeply rooted, and will take a while to solve. However, with the success of their Wii development, it looks like they're making progress.
 
It's refreshing to see a publisher do well on the Wii and the games not being total shovelware. 3 from the 5 highest rated games they released this quarter are on the Wii.


Still, it's mindboggling to see them bleed so much, especially considering they released the Sims 3. WTF is wrong with the management at EA?!
 

Tiktaalik

Member
Vinci said:
Still amazing that they keep posting losses. My god, it's like the company has an internal injury and it can't figure out where all the red stuff is coming from.

Well their Non-GAAP net loss was $6 million and there's a big section justifying what they pick and choose to make this difference. Many of these are perceived one time losses, such as losses related to trying to take over Take-Two. You can look over these to get a clearer picture.
 
Going forward, they have Batman, Madden, FIFA, KOTOR Online, Left 4 Dead 2, Rock Band Beatles and Mass Effect 2 before the end of the next fiscal year, as well as legacy sales for EA Active, Tiger, Sims 3, and Fight Night. At some point if they're still not breaking even they have to start trimming fat, perhaps they are simply too big to operate efficiently.
 

DMczaf

Member
Grand Slam Tennis will only be debuting on the Wii this year, according to EA Sports leader Peter Moore's comments during Electronic Arts' first quarter financial results call. EA Sports is diverting resources from teams working on the Xbox 360 and PlayStation 3 versions in order to work on an expansion pack for EA Sports Active.

Looking at Tennis sales vs EA Active sales, probably the smartest move they've made since...uh...announcing EA Sports Active!
 

szaromir

Banned
Batman is Eidos'/SE's title.
gerg said:
As others have said, EA's problems are deeply rooted, and will take a while to solve.
What EA is doing to solve them, though? It seems they are just too big even though they have the biggest revenues in the industry.
 

gerg

Member
szaromir said:
What EA is doing to solve them, though? It seems they are just too big even though they have the biggest revenues in the industry.

I think the point is that there may not be a lot that EA can do to solve their problems in the immediate future. charlequin or Opiate are probably more knowledgeable than me on the matter, but iirc one of their problems was the fact that their traditional, annual money-makers weren't experience the growth needed to sustain the company. I imagine that this situation is only exacerbated by the falling (perhaps "stalling"?) sales of a franchise such as Rock Band. And in a situation like this, I imagine that the only thing one can do is simply to develop more titles and explore other avenues, and hope that you come out of the stormy weather without too much damage. Ultimately, it's a long process that may never be fully effective.
 

Magik

Member
EA definitely should be pushing EA Sports Active. Its a fantastic product.

Lets hope they include a higher quality resistance band. My band is showing signs of wear and tear. :(
 

szaromir

Banned
gerg said:
I think the point is that there may not be a lot that EA can do to solve their problems in the immediate future. charlequin or Opiate are probably more knowledgeable than me on the matter, but iirc one of their problems was the fact that their traditional, annual money-makers weren't experience the growth needed to sustain the company.
Since their divisions seem fairly independent, I think EA Sports' titles are able to sustain EA Sports... I believe it's another division that is sinking money, namely EA Games. I think they grew a little bit mindlessly and a big number of new IPs is just too huge of a risk IMO. It certainly didn't pay off last year, when underperforming ME and DS hit the company hard, it might not pay off this year either.

Though as a gamer I am certainly happy about all these new games.:D
 
EA's present problems have manifested themselves from the past; they held on to the big franchises for too long and watched them shrink in value (NFS, The Street Titles, Burnout, etc) and their replacements aren't making money fast enough. The Sims 3 and MAdden might be sales juggernauts, but EA is too big for even these Titans to float them for a year.

This is the same problem that has (and will continue happen) to Take 2; when they were smaller, it was easy to lean on GTA's success; now that they've grown fat off of it, GTA is simply not enough to sustain them throughout the fiscal year, and their secondary and ancillary titles aren't making enough money to cover the spread.
 

Johann

Member
Vinci said:
Still amazing that they keep posting losses. My god, it's like the company has an internal injury and it can't figure out where all the red stuff is coming from.

EA is attempting to continue the age old of PC-esq publishing strategy of making as many different games in as many different genres as possible. If one of them is a hit, it'll make up for the losses of the rest... hopefully. However, everyone is playing on 'hard mode' with no continues (frozen credit market), less lives (layoffs and less cash), and strict game penalties (one commercial failure can have dire consequences).

It's really interesting to see how EA has dramatically changed from the start of this generation. To me, their current strategy is a mix of Riccitiello's response to EA's faltering brands and a repeat of Majesco's reconstruction after their internal collapse in 2005.

In reaction to dying brands (such as Need for Speed), one of EA's major goals this generation was to get out hit internals new IPs through experimenting/reconstructing their internal studios, such as buying out Bioware/Pandemic, having DICE do Mirror's Edge, and reconstructing EA Redwood Shores into Visceral Games. They also pushed the EA partners program to get and further diversify their portfolio of games (although EA reportedly gets a small cut of the profits in order to make the partnership more attractive). EA has attempted to jettison itself of its reliance on licensed properties. They recently ended their Godfather license since the growth of that IP was in Paramount's hands, not EA's hands. EA has attempted to take a different 'licensed' IP route through well-known, non-copyrighted IPs, such as Dante's Inferno. Allegedly, they are looking into the Jack the Ripper 'IP' for another game.

Now that's all fine and dandy but creating new IPs is expensive business, especially if you laid off a significant portion of your company. This is a problem Majesco faced when Advent Rising and other games failed to be big, blockbuster hits. The company changed its focus to 'value priced' games. This was a fancy way they would be making low-budget games, especially for the DS, since they were dirt poor. That's what EA meant through their increased Wii Support. Wii support and 'value priced' was essentially investor talk/double-speak about how the company is trying to conserve the money they have left. When Ubisoft talks about increasing DS support, they are talking about conserving cash and providing a cushion for the potential failure of bigger games. With the failure of pivotal new IPs, EA has found itself in a very similar position to Majesco.

Majesco is a completely different company today than it was years ago. It's not only one of the few publishers reporting a profit, it's also growing and expanding its portfolio of games. That 1.8 million for EA Sports Active is impressive but you should have seen Majesco's Ultimate Fitness sell 500,000+ copies without a major ad campaign or a conference demo. If you've ever seen or played the game, that has to be a ridiculous return on investment. Majesco was ahead of the curve when it came to reacting to the popularity of Wii Fit and the fitness genre. There was a brilliant interview with Majesco about Ultimate Fitness a long while ago. The Majesco employee described the Fitness/Health genre as the new Sports genre. Similar to the Sports genre, the Health genre was approachable by all people and would be a reliable source of revenue for years to come through easy installments. Unlike the Sports genre, however, fitness will never be out of season, there would be no expensive licenses to fight over, and most importantly, it was an untapped genre.

As a result of their financial problems, Majesco was forced be become very attuned to what the DS and Wii audience wanted in order to survive. The consequence of this was that the company was able to identify untapped areas in which it would be able to compete with limited competition. Despite the resources and wealth of their competitors, they were lightyears of what EA and Ubisoft are currently doing with the fitness genre. I feel that is what is happening to EA recently. While the Wii support is caused by financial concerns, the consequence is that they are beginning to understand Nintendo's philosophy with the Wii and creating games tailored to the values Wii owners want in their games.
 
I cant wait until the the fall press releases when EA throws up there

EA is the market leader releasing more than [insert number] "million selling" titles in 2009


Anyway, they could have given more detail on their titles.
 
Seriously, when was the last time I heard good news in financial reports? Are there even ANY companies (besides NIntendo and Capcom?) making money out of gaming?
 

legend166

Member
Sohter.Nura said:
Seriously, when was the last time I heard good news in financial reports? Are there even ANY companies (besides NIntendo and Capcom?) making money out of gaming?


Activision, sadly.
 

Parham

Banned
Sohter.Nura said:
Seriously, when was the last time I heard good news in financial reports? Are there even ANY companies (besides NIntendo and Capcom?) making money out of gaming?

THQ and Majesco
 
Bearillusion said:
Peter Moore curse strikes again.

I'm kidding.
Actually, I think his decision to come in the company and focus on the Wii games is what made the company beat expectations and forecasts, but I coud be wrong.
 

Rhindle

Member
norinrad21 said:
key word here is EFFORT + Wii = $$$$
Their PS3 sales are nearly as high as their Wii sales for the quarter, despite having thrown all their major releases at the Wii.

The interesting thing is that 360 sales fell off a cliff.
 
Top Bottom