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EA Fesses Up to Billion Dollar Fiscal Loss

May 6, 2009Written by Draisey

US Dollars Money

[shal]Electronic Arts[/shal] published its financial results for fiscal year 2009, which ended March 31st. And though the economic downturn has hit everyone in the industry, nobody has been hit harder than EA. 

Net losses for the past 12 months were $1.01 billion, which is more than double the $454 million that EA lost for fiscal year 2009. What makes this situation even more agonizing for the publisher is that sales were actually up compared to 2008, with revenue increasing 15% year-over-year to $4.21 billion.

It’s important to note though that EA’s 4th quarter performance from January to March was actually better than expected, and the company itself is trying to direct attention to the future rather than the past (or present). EA’s CEO John Riccitiello said in his public statement:

“EA’s strong cost actions in Q4 FY09 together with our investments in our digital service businesses will set us up for a stronger FY10. EA is well positioned with the right strategies in a growing industry.”

We’ll see how well that goes. EA is forecasting their fiscal 2009 revenue to stand between $3.7 billion and $3.85 billion. It also expects to lose money in fiscal 2010, although not quite as much as in fiscal 2009. For the full year, EA is expecting losses between $274 million and $469 million.

 Highlights from the conference call are listed below:

  • [shal]Pandemic[/shal]’s recent release [shal]The Lord of the Rings: Conquest[/shal] has sold more than 1 million copies.
  • The most recent info on [shal]Warhammer Online[/shal] puts the game’s dedicated player base at 300,000.
  • Electronic Arts is currently working on a lineup of 30 games for Apple’s iPhone.
  • EA Sports Active is confirmed for release this month.
  • Riccitiello said that he’s confident that 10 EA Wii games to be released during the current fiscal year will be hits.
  • The Sims 3 should be a major reason why EA Play division sales are expected to be up $300 million in the coming year. There will be downloadable content for the game on day one, as well as Apple Macintosh and iPhone versions.
  • EA Sports revenues are expected to be flat for the year, whereas EA Games should be up on the strength of Mass Effect 2, Dragon Age, [shal]Army of Two: The 40th Day[/shal], and more.
  • In a Q&A session during the call, EA executives acknowledged “softness” in the rhythm-game category that has caused them to lower their expectations for that part of their business.
  • Riccitiello said that he doesn’t think softness in the Wii market in Japan necessarily presages similar softness in North America. However, he does think that Asian trends such as subscription-based games are gaining considerable traction in the West.
  • When asked about research and development spending for the next generation of consoles, Riccitiello said that he hasn’t seen indications that a next generation needs to come anytime soon. He added that the current generation could definitely be an extended console generation because there isn’t as much need for advancement now that gaming has entered the HD era.
  • Riccitiello said that one of the company’s problem games that suffered as a result of the economic downturn last year was Need for Speed. EA is confident that this year’s [shal]Need for Speed[/shal], [shal]Madden[/shal], and [shal]FIFA[/shal] games “feel very strong,” He also pointed to [shal]EA Sports Active[/shal] and [shal]Brutal Legend[/shal]as potential breakout games.