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Electronic Arts sales are down, but so are losses

The video game publisher posts a 20% revenue drop in its second quarter. It slices its loss in half thanks to cost cutting and a shift to fewer, more profitable franchises.

November 03, 2010|By Alex Pham, Los Angeles Times

With fewer titles released this year, Electronic Arts Inc. on Tuesday posted a 20% revenue drop in its second quarter compared with a year earlier.

At the same time, the Redwood City, Calif., video game publisher sliced its net loss in half thanks to aggressive cost cutting and a shift to fewer, more profitable franchises.

The developer of Madden football and FIFA soccer titles posted $631 million in revenue for the quarter ended Sept. 30, down from $788 million a year earlier. Its loss of $201 million, or 61 cents a share, compared with a loss of $391 million, or $1.21, in 2009.

EA had expected lower sales, mostly because it released seven titles compared with nine last year. Its biggest title of the quarter was FIFA Soccer 11, which gave EA a revenue kick. Released Sept. 28 in North America and Oct. 1 in Europe, the game has sold 8 million copies worldwide.

Whether the games business is growing or shrinking depends on which parts of the industry are examined, John Riccitiello, EA's chief executive, said in a conference call with analysts.

The market for social games for Facebook and games for smart phones and mobile devices such as the iPhone and iPad grew more than 25% last quarter. The sale of games played on Sony Corp.'s PlayStation 3 and Microsoft Corp.'s Xbox 360 are also growing "mid-teens," Riccitiello said.

Offsetting that growth was a 34% drop in the sale of games for Nintendo Co.'s Wii as well as Nintendo's portable Dual Screen console, according to Eric Brown, EA's chief financial officer. Music games such as Rock Band and Guitar Hero have also suffered double-digit declines as consumers mark off the category as last year's fad.

EA also on Tuesday announced a five-year agreement to exclusively use Facebook's payment system for games played on the social network's platform. EA had previously allowed players to use PayPal and other forms of payment. Facebook generally takes a 30% cut of the transactions processed by its system.

EA's shares, which rose 40 cents to $16.20 on Tuesday, gave up nearly all of the gain in extended trading after the earnings report.

alex.pham@latimes.com

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