Feb. 4 (Bloomberg) -- Electronic Arts Inc., the world’s second-largest video-game publisher, posted its biggest gain in three months in Nasdaq trading after Chief Executive Officer John Riccitiello accelerated plans to cut spending.

Electronic Arts, based in Redwood City, California, climbed $1.77, or 11 percent, to $17.27 at 4 p.m. New York time on the Nasdaq Stock Market, the biggest increase since Oct. 28. The shares have fallen 63 percent in the past year.

Riccitiello is repositioning Electronic Arts to develop games for Nintendo Co.’s best-selling Wii console. The company, which reported its eighth straight quarterly loss yesterday, is adding 100 new job cuts to the 1,000 previously announced and will reduce fiscal 2010 operating costs by $500 million.

“They recognize that they have to make serious cost cuts,” said Michael Pachter, a Los Angeles-based analyst for Wedbush Morgan Securities who recommends the stock and doesn’t own it. “If you try to do too much you do everything poorly.”

The company reported a third-quarter loss of $641 million, or $2 a share, after writing down the value of its wireless-game assets. The results compare with a loss of $33 million, or 10 cents, a year earlier. Revenue rose 10 percent to $1.65 billion.

All units except marketing will lower spending, Riccitiello said yesterday on a conference call. The company will shut 12 locations, up from a previous target of nine, and eliminate merit-pay raises for fiscal 2010.

“We have knocked our cost structure to a more conservative revenue projection,” Riccitiello said. “We’ve made the hard calls, now it’s all about execution.”

Electronic Arts delayed the release of “The Sims 3,” “Godfather 2” and “Dragon Age” titles into the fiscal year that starts in April.

Wii, Recession

For the fiscal year ending in March, the company expects a loss of $3.29 to $3.56 a share. Revenue is projected at $4.2 billion to $4.25 billion, Electronic Arts said.

The U.S. recession and Electronic Arts’ failure to develop hits for the Wii already forced Riccitiello to announce job cuts and studio closures, and to trim the fiscal 2009 sales forecast. The company said in December it would miss a previous forecast for as much as $5.15 billion in fiscal 2009 revenue and up to 7 cents a share in profit because of slow holiday sales.

The third-quarter charge of $368 million was necessary because of a drop in Electronic Arts’ market value, Chief Financial Officer Eric Brown said in an interview. The company paid $682 million for Jamdat Mobile Inc. in 2006 to increase sales of games and ring tones on mobile devices.

Games ‘Underperformed’

Results in the December quarter also included $244 million in tax-related costs. Profit excluding some items was 56 cents a share, missing the 89-cent average estimate of analysts compiled by Bloomberg. Sales including changes in deferred revenue totaled $1.74 billion, missing the $1.89 billion average estimate.

“Their games clearly underperformed dramatically during the holiday,” Hickey said.

Electronic Arts’ only game in the top 10 in U.S. sales last year was “Madden NFL,” according to researcher NPD Group Inc. Activision Blizzard Inc. is the largest game publisher.

Riccitiello is devoting more resources to developing hit games for the Wii. In May, the company will release “Active,” a fitness game for the Nintendo console that’s being marketed to women. Electronic Arts also will introduce a tennis game this year that utilizes the Wii’s motion-activated controllers.

Electronic Arts said in December it would close or consolidate studios and eliminate 1,000 jobs.

For fiscal 2010, Electronic Arts projects sales of $4.2 billion to $4.35 billion, and a profit excluding some items of $1 a share. Analysts expect earnings of $1.12 a share, the average of 23 estimates, on sales of $4.77 billion.

(Electronic Arts held an earnings conference call for investors and analysts. For a replay, call +1-719-457-0820, access code 220497, or go to http://investor.ea.com)

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

Last Updated: February 4, 2009 16:09 EST