Shares of Electronic Arts Inc. plunged more than 8% in after-hours trading Monday following the video game company's release of its third-quarter results and lowering of earnings projections as the game industry continues to struggle with the economic downturn.
The Redwood City, Calif., publisher of Madden NFL, Mass Effect and the Sims titles posted a 25% revenue drop to $1.2 billion in the quarter that ended Dec. 31, down from $1.7 billion a year earlier. Its net loss for the quarter narrowed to $82 million, or 25 cents a share, compared with a $654-million loss, or $2 a share, a year earlier.
EA's stock, which gained 23 cents to $17.49 before the earnings release, retreated $1.46, or 8.4% in after-hours trading.
"They misjudged the extent of the economic downturn, as did the rest of us," said Michael Pachter, an analyst with Wedbush Morgan Securities who attributed the drop in stock price more to its cautious financial outlook than its past results.
Eric Brown, the company's chief financial officer, warned that sales of disc-based games sold at retail stores could decline 3% this year. As a result, the company expects its per-share earnings for its fiscal year ending March 31 to land between 39 and 43 cents, down from the estimate of 40 to 55 cents that EA executives gave just four weeks ago.