Electronic Arts Declines After Forecast Misses Estimates

Electronic Arts Inc. (EA), the second- largest U.S. video-game maker, declined in extended trading after the company’s forecast for fourth-quarter sales fell short of analysts’ projections.

The shares fell 1.5 percent to $14.85 in late trading yesterday, after closing at $15.08 in New York. Adjusted revenue in the fourth quarter ending March 31 will be about $1.03 billion to $1.13 billion, the Redwood City, California-based company said in a statement yesterday. Analysts on average predicted sales of $1.22 billion, according to data compiled by Bloomberg.

Electronic Arts, like other game producers, is trying to offer more products and updates online to counter shrinking consumer spending on packaged titles for home consoles. Digital revenue rose 8 percent to $407 million in the third quarter, helped by $100 million from its “FIFA 13” soccer title.

“Based on Christmas, we’re a little bit worried about how strong the consumer market is,” Chief Financial Officer Blake Jorgensen said in an interview yesterday. The company lowered its forecast amid the industry slump in console sales, he said.

Adjusted fourth-quarter profit will be about 57 cents to 72 cents a share, the company said in the statement, compared with the 72 cent-average projection by analysts.

Electronic Arts has several big-budget releases of packaged games scheduled for the current quarter, including “Dead Space 3,” “Crysis 3” and a new “Sims” title.

Digital Revenue

The company posted fiscal third-quarter profit that declined less than analysts estimated, helped by higher-margin digital revenue. Profit excluding some items shrank to 57 cents a share, compared to the average analyst estimate of 56 cents. Sales, excluding changes in deferred revenue, fell 28 percent to $1.18 billion in the quarter ended Dec. 31, missing the $1.29 billion average.

Its net loss in the third quarter narrowed to $45 million, or 15 cents a share, from $205 million, or 62 cents, a year earlier.

For the fiscal year ending in March, Electronic Arts said adjusted profit would be about 86 cents to $1 a share on sales of about $3.78 billion to $3.88 billion. Analysts projected adjusted profit of $1.02 a share on sales of $4.08 billion. In October, the company forecast profit of about $1 to $1.15 a share on revenue of about $4.05 billion to $4.20 billion.

Electronic Arts has declined 16 percent in the year through yesterday, compared with the Standard & Poor’s 500 Index, which has gained 14 percent, and Activision Blizzard Inc. (ATVI), its bigger competitor, which has declined 7.1 percent.

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

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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