Electronic Arts Delays Holiday Game Battlefield to 2015
Electronic Arts Inc. (EA), maker of the FIFA soccer and Titanfall video games, delayed the release of Battlefield Hardline, a major holiday title, until next year.
The Redwood City, California-based company pushed back the release of Battlefield Hardline for additional work, missing out on Christmas sales for an important title. The delay overshadowed fiscal first-quarter sales and profit that beat analysts’ estimates on gains from FIFA soccer, Titanfall, Battlefield 4 and EA Sports UFC.
“Some people are spooked because one of the games is delayed out of the quarter,” said Michael Pachter, an analyst with Wedbush Securities in Los Angeles who recommends buying the stock. “It’s not that big of a deal. It’s not that they’re going to permanently lose sales.”
Electronic Arts fell 6.2 percent to $36.04 at the close in New York, the biggest one-day drop since Nov. 15. The shares have gained 57 percent this year.
With the delay, Electronic Arts reiterated its outlook for the year that ends next March. The company is forecasting sales of $4.1 billion on an adjusted basis and profit of $1.85 a share, excluding items. Analysts project $1.88 a share, with sales of $4.14 billion.
The outlook “reflects the launch date changes for Battlefield Hardline and Dragon Age Inquisition,” the company said in its statement.
“We decided that the right thing to do was to take more time to ensure Hardline is the best, most innovative Battlefield experience we can give to you,” the company said on its blog.
Electronic Arts could recoup the delayed revenue as Battlefield Hardline sells over a longer period of time and may raise its outlook later if circumstances warrant, said Chief Financial Officer Blake Jorgensen.
“It doesn’t signal anything negative or positive,” Jorgensen said in a telephone interview. “We’re still very early in the year.”
The delay may reduce the company’s holiday sales by about 2 million units, Eric Handler, an analyst with MKM Partners LLC, in Greenwich, Connecticut, said in a telephone interview.
“Given that they don’t have a lot of near-term catalysts from a game perspective, there are some concerns about the back half of the year,” said Handler, who has a neutral rating on the stock. “It’s a very crowded holiday season.”
First-quarter earnings, excluding items, totaled 19 cents a share, Electronic Arts said, compared with a loss of 40 cents a year ago. Analysts had forecast a loss of 4 cents, the average of 23 estimates. Sales, including adjustments, grew 57 percent to $775 million in the period ended June 30, beating estimates of $714.3 million.
Net income for the quarter jumped 51 percent to $335 million, or $1.04 a share, from a year earlier, Electronic Arts said. Revenue advanced 28 percent to $1.21 billion.
With new consoles from Microsoft Corp. (MSFT) and Sony Corp. (SNE) on sale, the company generated growth in both packaged games and online purchases. Electronic Arts had several top-selling titles in the U.S. during the quarter, according to researcher NPD Group Inc., including Titanfall, FIFA soccer and UFC.
Digital revenue increased 28 percent to $482 million in the period, while sales of packaged games more than doubled to $293 million, the company said.
This quarter, Electronic Arts expects profit of 50 cents a share, excluding items, compared with the 52-cent average of analysts’ estimates. Sales on an adjusted basis will be $1.14 billion, in line with projections, fueled by FIFA, The Sims, Madden NFL and EA Sports NHL, the company said.
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