Electronic Arts Reports 28.5% Dip In Revenue, Outlook Weak (EA)
Shares of Electronic Arts Inc. (NASDAQ: EA) slipped in aftermarket trading on Wednesday after the video game maker provided lackluster outlook on fiscal 2013 even as revenue in the fiscal third quarter, which is typically strong period for retailers due to holiday season, fell short of Street’s expectation.
A bearish outlook is not totally surprising since the video game industry is struggling with dwindling demand for games due to proliferation of smartphones and tablets.
- Adjusted earnings however barely managed to beat analysts forecast
- For the fiscal ending March, the Company is expecting non-GAAP revenue of $3.8 billion to $3.9 billion and earnings of $0.86 to $1.00 per share compared to its earlier guidance of $1.00 to $1.15 a share
According to Electronic Arts’ Chief Financial Officer, Blake Jorgensen, earnings outlook was downwardly revised after taking into account macroeconomic uncertainties in the quarter ending March—which is also a traditionally weak season for the video game industry.
Now in order to counter dwindling sales, the company is relying on several high profile releases which will hit the market in coming days. Electronic Arts will be releasing four new games in the fourth quarter which include “SimCity” in March, and action-horror title “Dead Space 3”, scheduled to be released next week. Besides, the Company is increasing its traction in digital games business in order to reduce its dependency in traditional console games business.
For the quarter ended December 31, the company reported net revenue of $922 million, compared to $1.06 billion in the year earlier quarter. Net loss stood at $45 million, or 15 cents a share, compared with $205 million, or 62 cents a share, in the same period of last year.
Adjusted revenue stood at $1.18 billion, falling 28.5% from the year earlier quarter, and also falling short of analysts’ forecast for $1.29 billion, according to data compiled by Thomson Reuters.
Adjusted earnings came in at 57 cents a share, a penny above analysts’ expectation.