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Electronic Arts Suffers $45 Million Loss

| 31 Jan 2013 17:50
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Weak Medal of Honor: Warfighter sales have forced Electronic Arts to scale back its earnings forecast for 2013.

Electronic Arts reported a $45 million loss for the fiscal quarter that ended on December 31, 2012, which isn't good except when held up against the company's results over the same period last year, a loss of $205 million. But while the loss has improved, the revenue situation has not: Revenues for the quarter hit $922 million, compared to $1.06 billion the previous year. In response, EA reduce its annual earnings guidance slightly, from $3.85-4 billion to $3.7-3.8 billion.

"The economy hasn't gotten any stronger," EA Chief Financial Officer Blake Jorgensen told Reuters. "It's a little early for me to know how strong the market's going to be, so based on that we widened our range for revenue for the fourth quarter and brought our guidance down slightly just to make sure we're prudent."

But analyst Michael Pachter said EA is being "overly conservative" in the wake of disappointing Medal of Honor: Warfighter sales, which were bad enough that the publisher revealed yesterday that plans for future games in the franchise have been shelved. "They were probably a little shell-shocked by how bad holiday demand was, and I think at the low end they're probably assuming demand is down 20 percent or so," he said.

BMO Capital Markets analyst Edward Williams also noted that some of EA's troubles are beyond its control, as the entire industry is suffering from a downturn in demand as consumers await next-gen hardware from Sony and Microsoft. "The guidance pretty clearly represents a lot uncertainty in the market and that uncertainty stems from recent performances as consumers are pretty aware of new consoles coming," he said.

In other words, the news may not be great but it's not necessarily all that bad, either. EA also announced that its digital business is continuing to grow, with games and services for mobile (including handhelds) growing 18 percent year-over-year to roughly $100 million, and that its Origin platform now has more than 39 million registered users and distribution deals with 86 independent developers.

Source: Reuters

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