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Electronic Arts, THQ report losses

August 02, 2007|Alex Pham | Times Staff Writer

Video game publishers Electronic Arts Inc. and THQ Inc. on Wednesday posted quarterly losses and lower revenues, as the traditionally slow summer coincided with higher costs of making next-generation titles.

EA, which publishes the "Madden Football" and "The Sims" series of games, reported fiscal first-quarter revenue of $395 million, a 4% decline from a year earlier, despite strong sales of its "Harry Potter and the Order of the Phoenix" game. Its loss widened to $132 million from $81 million.

EA Chief Financial Officer Warren Jenson cited a "light release schedule" for the quarter, but promised a strong holiday season with the release of such games as "Skate," "Army of Two" and "Rock Band."

Confident in the upcoming slate of titles, the Redwood City, Calif.-based company bumped up its fiscal year revenue projections by $100 million. It expects from $3.2 billion to $3.5 billion.

EA's shares, which closed down 54 cents at $48.10, rose 76 cents to $48.86 in late trading after the earnings release.

The powerhouse publisher has seen its market share slip over the last year as rivals such as Activision Inc. and THQ gained ground by creating more games for Nintendo Co.'s Wii console, while EA focused on the less successful PlayStation 3 and Xbox 360 systems.

Activision became the top U.S. publisher for the first six months of 2007, unseating EA for the first time this decade.

"We're not pleased with our year-to-date segment shares," EA Chief Executive John Riccitiello said.

Since taking the top job in February, Riccitiello has reorganized EA's development studios and expanded its presence in Asia. Riccitiello said he was working to cut costs.

Higher costs also have affected THQ, which posted a fiscal first-quarter loss of $9.3 million on $104.5 million in revenue. The Calabasas-based company lost $12.1 million on $138.8 million in sales in the year-earlier period.

THQ's shares fell $1.42, or 5%, to $27.34, primarily because it projected expenses higher than what analysts were expecting.

Development costs for next-generation consoles have soared, but game prices haven't gone up as much and sales are constrained by the number of new consoles in consumers' hands.

Most game publishers, however, still expect to ring up big sales this holiday season.

THQ Chief Executive Brian Farrell said sales would grow 12% to 15% this year. "We're feeling pretty confident about the business," he added.


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