Electronic Arts' Focus on Fewer, Profitable Titles Pays Off in Sales, Earnings Gains

The maker of "The Sims" games said Tuesday that for the full fiscal year, sales were up 44% and net income tripled. The Redwood City, Calif., company projected more modest growth ahead, however, as the brisk video game sales of the last two years begin to level off.

EA said revenue was $463 million in the fourth quarter ended March 31, when it released a dozen new games, down slightly from $470 million in the same quarter last year, when it debuted 20 titles.

But quarterly net income was lower, at $9 million, or 6 cents a share, compared with $47 million, or 33 cents, a year earlier. In the recent quarter, the video game giant took a $72-million restructuring charge in the recent quarter, mostly because of its money-losing EA.com division.

Still, the company's performance appeared to validate the wisdom of EA's recent path: focusing its resources on a smaller quantity of games as rivals pumped out a record number of titles last year.

EA can "deliver more revenue per title than just about anybody out there," with the exception of Take-Two Interactive Software Inc., publisher of the 2002 blockbuster "Grand Theft Auto" series, said Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles. "It's just amazing," he said.

For the fiscal year, EA posted $2.5 billion in sales, up from $1.7 billion the previous year. Net income rose to $317 million, or $2.17 a share, from $101.5 million, or 71 cents a year earlier. It had $1.6 billion in cash at the end of the quarter.

EA counted 22 titles that sold more than 1 million copies last year, including "Madden NFL Football," "FIFA Soccer" and "Medal of Honor." In the quarter, four games sold more than 1 million copies, including "Command & Conquer: Generals," "The Sims," "Lord of the Rings: The Two Towers," and "SimCity 4."

In contrast, "The Sims Online" game, published by EA.com, has sold just 125,000 units since its release last year, according to market research firm NPD Group Inc.

"In fairness, we had a miss," Warren Jenson, EA's chief financial officer, said in a conference call with analysts. The Sims Online "is not where we want it to be."