Electronic Arts Profit Tops Estimates, Outlook Short
(Corrects Halo title in seventh paragraph.)
Electronic Arts Inc. (EA), the second- largest U.S. video-game maker, posted second-quarter profit that beat analysts’ estimates as digital revenue grew. The current quarter’s outlook missed projections.
Profit totaled 15 cents a share, excluding some items, Redwood City, California-based Electronic Arts said today in a statement. That topped the 11-cent average of 23 analysts’ estimates compiled by Bloomberg. Sales, excluding changes in deferred revenue, rose 4.4 percent to $1.08 billion in the period ended Sept. 30, Electronic Arts said, matching the average projection.
The company is offering more games online to reduce its reliance on sales through stores, which have fallen as consumers boost Internet play. Digital revenue grew 38 percent to $324 million from a year ago, lifted by online sales such as add-ons to packaged titles like “Madden NFL” and “FIFA Soccer.” The added content extends play time for users and increases revenue, said Chief Financial Officer Blake Jorgensen.
“We’re trying to move the business further and further that way on every single platform,” Jorgensen said in an interview.
In the current third quarter, Electronic Arts predicts profit, excluding items such as stock-based compensation, of 50 cents to 60 cents a share, less than the 70-cent average of 23 estimates. Sales, excluding changes in deferred revenue, will be $1.25 billion to $1.35 billion, compared with analysts’ projections of $1.38 billion.
Competitive pressure during the holiday buying period and lower-than-expected sales of the latest “Medal of Honor” game contributed to the conservative guidance, Jorgensen said.
On Nov. 6, Microsoft Corp. (MSFT) releases “Halo 4,” the next installment of its $3 billion shooter franchise. A week later, Activision Blizzard Inc. (ATVI), the largest U.S. video-game publisher, begins selling “Call of Duty: Black Ops 2.”
The net loss for the second quarter widened to $381 million, or $1.21 a share, from $340 million, or $1.03 a share, a year earlier. Revenue fell 0.6 percent to $711 million, the company said.
Electronic Arts closed at $11.91 on Oct. 26, down 2.5 percent, the last trading day before markets closed as a result of Hurricane Sandy. The stock has lost 42 percent this year.
To contact the editor responsible for this story: Anthony Palazzo at email@example.com