Electronic Arts CEO Steps Down as Quarter Results Fall Short
Electronic Arts Inc. (EA), the second- largest U.S. maker of video games, said John Riccitiello is stepping down as chief executive officer and warned quarterly results may fall short of forecasts. The shares rose.
Chairman Larry Probst, 63, who ran EA until 2007, becomes executive chairman and will lead management as the board seeks a new CEO, the Redwood City, California-based company said today in a statement. Riccitiello’s last day is March 30.
Several new titles under Riccitiello, including “Medal of Honor” and the multiplayer “Star Wars,” failed to meet expectations, said Edward Woo, an analyst at Ascendiant Capital Markets in Irvine, California. The company also flubbed the latest version of its popular “SimCity,” which some users couldn’t play because EA’s computers were overwhelmed.
“He lasted a pretty long time given that the company hasn’t really performed that well,” said Woo, who has a neutral rating on the stock. “The fact that their stock is up on the news goes to show investors weren’t that big a fan of Riccitiello.”
Peter Moore, 58, EA’s chief operating officer, is a leading candidate to fill the job, Woo said.
“It’s his to lose,” Woo said. The company had no comment beyond the statement.
The resignation comes as the industry gears up for a new generation of consoles while facing threats from less costly games played on phones and tablets. Nintendo Co. came out with the Wii U in November and Sony Corp. plans a new PlayStation before year-end. Microsoft Corp. hasn’t said when a new Xbox will become available.
EA, the maker of “FIFA” soccer titles and “Madden” football games, is offering more of its products online to counter slumping sales of conventional console-based titles. U.S. retail sales of video games slid 22 percent last year to $13.3 billion, according to NPD Group, an industry researcher.
Riccitiello, 53, took over as CEO from Probst in 2007. He had been with the company for a decade, having previously worked at Sara Lee Corp. Probst served as CEO starting in 1991.
“My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year,” Riccitiello said in a blog posting.
Electronic Arts said the current fourth quarter may fall short of forecasts issued on Jan. 30. The company had seen profit of 57 cents to 72 cents a share, excluding items, on adjusted revenue of as much as $1.13 billion. Chief Financial Officer Blake Jorgensen cited slumping console sales at the time for the company’s lowered full-year outlook.
Electronic Arts rose 3.1 percent to $19.30 in extended trading. The shares dropped 0.9 percent to $18.71 at the close in New York and are up 29 percent this year.
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