Feb. 26 (Bloomberg) -- Electronic Arts Inc., the world's largest video-game publisher, said former President John Riccitiello will return to the company as chief executive officer, succeeding Larry Probst, who continues as chairman.

Riccitiello, 47, left the company in 2004 to co-found the private equity firm Elevation Partners with rock star Bono. He starts April 2 and will also be a director, the Redwood City, California-based company said today in a statement.

Like other video-game publishers, Electronic Arts struggled as customers cut back on purchases while awaiting new consoles from Sony Corp. and Nintendo Co. over the past year. Electronic Arts, publisher of the ``Madden NFL'' and ``Need for Speed'' games, also faces a Securities and Exchange Commission probe of its stock-option grants.

``Electronic Arts has stumbled over the last two and one half years since he left,'' said Evan Wilson, an analyst at Pacific Crest Securities in Portland, Oregon. ``The stock has underperformed the rest of the publishers.''

Shares of Electronic Arts rose 44 cents to $52.40 in extended trading after the announcement. They fell $1.23, or 2.3 percent, to $51.96 at 4:30 p.m. New York time in Nasdaq Stock Market trading and are little changed in the past year.

The appointment came as a surprise, said Mike Hickey, an analyst at Janco Partners in Greenwood Village, Colorado, who rates the shares ``buy'' and doesn't own them.

Game Transition

``Larry's done a good job over the last cycle and is well- respected,'' Hickey said. ``At some level there could be dissatisfaction the stock hasn't move higher.''

Probst, 56, has been CEO of Electronic Arts since 1991. The company said in August its own review of option grants going back 10 years found no evidence of backdating.

Today's change was ``absolutely not'' related to the options probe, spokesman Jeff Brown said in an interview.

The company never replaced Riccitiello as president and chief operating officer after he left in 2004, Brown said. Directors approved Probst's proposal to rehire Riccitiello at a February meeting, he said.

During his time as president, Riccitiello pushed to develop online games and helped put the ``The Sims,'' in which players create virtual communities, online in 2002, said Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles. The game is published by Walnut Creek, California-based Maxis Inc. and is distributed by Electronic Arts.

Riccitiello returns as the company continues the transition to producing games for Wii and PlayStation 3, Brown said.

`Mercenaries'

In the third quarter ended Dec. 31, Electronic Arts reported net income slid 38 percent to $160 million, or 50 cents a share. Sales were little changed at $1.28 billion.

Elevation Partners owns controlling stakes in game developers BioWare Corp. and Pandemic Studios LLC, creators of ``Baldur's Gate,'' ``Mercenaries'' and ``Star Wars'' games. Riccitiello will resign from positions at those companies.

Electronic Arts also publishes Elevation's ``Mercenaries2: World in Flames'' combat game, Brown said.

Riccitiello has ``looked at every asset that's for sale, every partnership or joint venture, in the last three years,'' said Pachter. ``He knows of the bargains and values that are out there. It's a win for them. I think they win big.''

Probst ``can now work with a guy he hired originally, that he knows very well,'' said Pachter, who rates the stock ``strong buy'' and doesn't own it.

In November, Electronic Arts bought Lake City-based Headgate Studios to make games for Nintendo's Wii, which outsold Sony's new PlayStation 3 in December and January.

The company planned to release four Wii games this quarter and has 15 in development.

Riccitiello, Wilson said, left Electronic Arts ``in very good condition'' in 2004. He rates the shares ``sector perform'' and doesn't own them.

As CEO, Riccitiello will receive a salary of $750,000 and could earn a bonus doubling that. The company also granted him options to buy 850,000 shares.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net.

Last Updated: February 26, 2007 20:02 EST