Electronic Arts Posts 47% Drop in Profit, Beats Wall Street Forecasts
Electronic Arts Inc. reported a 47% decline in fiscal second-quarter profit Tuesday but beat Wall Street expectations on strong sales of sports-themed video games.
The world’s largest independent video game publisher posted net income of $51 million, or 16 cents a share, compared with $97 million, or 31 cents, a year earlier. Revenue for the period ended Sept. 30 fell 5.7% to $675 million.
Analysts, on average, had expected net income of 5 cents a share on sales of $634.6 million, according to Reuters Estimates.
Sporting titles such as “Madden NFL 06” and “FIFA 06” drove sales during the quarter. That helped EA exceed analysts’ estimates, though not its sales from a year earlier, when the company launched “The Sims 2,” a sequel to a previous hot seller.
“It always has to do with what you release and when you release it,” EA Chief Financial Officer Warren Jenson said. “We think we’re performing very strongly compared to the competition.”
Jenson described the video game industry as being in the midst of a transition as companies such as Microsoft Corp. and Sony Corp. prepare to release new game consoles. He warned that the scenario could spur abrupt changes in pricing and demand for software.
“Expect the unexpected,” Jenson said during a call with investors.
The company, based in Redwood City, Calif., reiterated its earnings forecast of $1.45 to $1.60 a share for the fiscal year.
“People thought they were going to lower their guidance, but they maintained it,” said Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles. “If they make their numbers for the year we should be really happy.”
Electronic Arts shares, which fell $1.09 to $55.79 in regular trading, rose to $56.89 after hours in response to the earnings announcement.
Separately, EA today is expected to announce a deal with 20th Century Fox Television and Gracie Films that would allow the video game maker to develop multiple titles based on the hit TV series “The Simpsons.” The first game would be launched on one of the next-generation gaming consoles.
*
Also
* Sun Microsystems Inc.’s fiscal first-quarter loss narrowed and sales grew 3.7% as the server and software maker benefited from two acquisitions. For the three months ended Sept. 25, Santa Clara, Calif.-based Sun lost $123 million, or 4 cents a share, including a $50-million expense related to stock options. That compares with a loss of $133 million, or 4 cents, a year earlier. Revenue rose to $2.73 billion from $2.63 billion.
* Shares of Reliant Energy Inc. tumbled 25% as the company swung to a loss after settling allegations of manipulating prices during the California energy crisis. Houston-based Reliant posted a third-quarter loss of $270.3 million, or 89 cents a share, contrasted with a profit of $345 million, or $1.04, a year earlier. Sales rose 16% to $2.96 billion. The stock fell $3.19 to $9.51.
* Los Angeles-based real estate brokerage CB Richard Ellis Group Inc. reported a big jump in profit during the third quarter, citing robust investment sales and improved leasing activity. The company posted net income of $56.9 million, or 74 cents a share, compared with $11.9 million, or 16 cents, a year earlier. Revenue increased 29% to $744.2 million.
* Real estate investment trust Maguire Properties Inc., a Los Angeles office developer and landlord, reported third-quarter funds from operations of $24.1 million, or 55 cents a share, compared with $21.7 million, or 51 cents, a year earlier. Revenue rose 53% to $128.8 million.
* Woodland Hills-based insurer Health Net Inc. reported third-quarter net income of $78.2 million, or 67 cents a share, an 8.8% increase from $71.9 million, or 64 cents, a year earlier. Revenue rose 4.2% to $3.06 billion.
* Shares of Rubio’s Restaurants Inc. fell $1.05, or 11%, to $8.33 after the Carlsbad, Calif., company reported third-quarter net income of $828,000, or 9 cents a share, down 36% from $1.3 million, or 14 cents, a year earlier. The chain of Mexican-themed restaurants said revenue rose 0.9% to $36.5 million.
