EA’s results? Depends on which report you read

For Electronic Arts Inc., it was a tale of two earnings.

One report, based on commonly used accounting standards known as GAAP, was grim. EA said Tuesday that sales plunged nearly 20% to $644 million in its fiscal first quarter ended June 30 compared with the same period a year earlier. Losses swelled to $234 million, or 72 cents a share, from $95 million, or 30 cents, last year.

The other report was positive. Revenue grew 34% to $816 million from $609 million in 2008. And losses were a mere $6 million, or 2 cents a share, down from $135 million, or 42 cents, a year earlier.

But because of the peculiar way EA and some other game publishers book their sales, both reports are considered valid.

Most Wall Street analysts say they pay attention to EA’s non-GAAP accounting as a measure of its financial performance.

From that perspective, EA hit all its marks. It sold 3.7 million copies of the Sims 3, ahead of the rate recorded by the Sims 2. The Redwood City, Calif., game publisher also delivered on its promise to become a leading publisher of games for Nintendo Co.’s popular Wii console, capturing 21% of all games sold for the Wii in North America. And it racked up $124 million in revenue from digital distribution of games (as opposed to shrink-wrapped discs sold by retailers), up 38% from a year earlier.

“It was a pretty strong quarter,” said Colin Sebastian, an analyst with Lazard Capital Markets.

Investors appeared to agree. EA’s shares, which gained 34 cents to close at $21.89, ticked up an additional 6 cents in extended trading after the earnings release.

Boosting investor optimism were rumors of an impending price trim by Sony Corp. of its PlayStation 3 game console, which currently retails for $400 to $450. A price cut would boost console sales, which would in turn give game sales a jump-start. Sony did not return messages seeking confirmation.

“Sony said that the cost of building the PS3 has come down 70% since they introduced it” in November 2006, said Daniel Ernst, an analyst with Hudson Square Research. “We’re very confident a price drop will happen.”

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alex.pham@latimes.com