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EA's Q1 earnings slip 4 percent

By Tor Thorsen, GameSpotPosted Aug 1, 2007 2:06 pm PT

Touting eight original IPs in fiscal '08, publisher reports $395 million in quarterly revenue; latest Harry Potter game moves 2M units in four days.

Hours after rival THQ reported a decline in earnings for its first fiscal quarter, Electronic Arts has done the same. The world's biggest third-party publisher reported $395 million of net revenue for the April-June quarter, down four percent from the $413 million it took in during the same period in 2006. The company's net quarterly loss also grew year over year from $81 million to $132 million, or $0.26 and $0.42 per share, respectively.

EA's shortfall came during three boom months for the US game-industry, which saw revenues grow 20 percent in April, 49 percent in May, and 31 percent in June. In its earnings report, the publisher didn't cite any primary reason for the downturn, but did mention that changes to the way it bills for hosting online game services will cause "a $36 million sequential increase in deferred net revenue" which will be included in a later period's earnings.

Of its April-June releases, EA singled out its top title as the multiplatform film tie-in Harry Potter and the Order of the Phoenix, which sold--not shipped--two million units in the four days after its June 25 release. Other big sellers for the month were Need for Speed Carbon, The Sims 2 Pets and The Sims 2, and Command & Conquer 3 Tiberium Wars, which launched on 360 during the month. To date, the EALA-developed game has sold over 2 million units worldwide.

In a statement, EA CEO John Riccitiello talked up organization changes and two high-profile hires during the quarter. "In the last three months we announced the reorganization of our business into four labels and welcomed Kathy Vrabeck and Peter Moore to EA," he said. EA Casual president Vrabeck served as Activision president from 2003 to 2005, while EA Sports president Moore had been the Xbox 360's most public face as corporate vice president of the entertainment and devices division of Microsoft's interactive entertainment business.

EA also made much of the product lineup for its 2008 fiscal year, which ends on March 31, 2008. The 12 months will see the publisher release eight all-new IPs, including Boogie, EA Playground, Army of Two, Skate, Smarty Pants, Rock Band, Crysis (now due in early November), and "PQRS"--a code-named Wii game codeveloped by filmmaker Steven Spielberg. Two new titles based on existing licenses--board game-based Warhammer Online and the cartoon-inspired The Simpsons Game--will also hit stories during the period.

Also due in EA's 2008 fiscal year are Medal of Honor Airborne, Need for Speed ProStreet, SimCity Societies, and the latest Sims 2 expansion, The Sims 2: Bon Voyage. EA Sports will also roll out the latest installments in the FIFA, Tiger Woods PGA Tour, NBA Live, and all-important Madden NFL franchises. The division recently released NCAA Football 08 and NASCAR 08 on several platforms.

In a largely uneventful postearnings conference call with analysts, EA executives declined to give a price for Rock Band's instrument peripherals. They said Madden NFL 08 at least "a half million" preorders, and said they were considering lowering the price of the PlayStation 2 version of NCAA Football 07, which is lagging behind other platforms. Riccitiello also downplayed competition from Halo 3 and Grand Theft Auto IV, saying that the two games would boost console sales and thereby benefit the industry as a whole.

Though EA's earnings were reported after the Wall Street markets closed, its share price ended the day at $48.10, down $0.54 (1.11 percent). In after hours trading, it slid further, down $0.81 (1.68 percent) to $47.25 as of press time.

69 Comments

  • packernation31

    Posted Aug 12, 2007 6:28 pm PT

    EA's fine, they have plenty of blockbuster's ready to hit shelves soon.

  • wakko19991

    Posted Aug 8, 2007 11:46 am PT

    they dont do anything innovative anymore. period.

  • maxmax1234

    Posted Aug 8, 2007 3:50 am PT

    best seller, hptootp?

  • Noah05

    Posted Aug 7, 2007 6:32 pm PT

    4% isnt soo bad compared to other companies

  • MichaeltheCM

    Posted Aug 2, 2007 11:42 pm PT

    4% isnt soo bad compared to other companies

  • Sheiko

    Posted Aug 2, 2007 2:50 pm PT

    Whats 4% when you already have so many exclusive deals like the NFL contract and still try to advertise. Whats a few million out of a billion? Meh. We should just boycott this company.

  • thetealcaptain

    Posted Aug 2, 2007 1:15 pm PT

    ByeBye4545........

    EA should care about every customer they lose, it''s a common business practice to realize that if a hand full of people stop buying ur product it's a fluke. However when hundreds if not thousands stop buying a product it's a trend, trends happen for reasons. They need to identify what those reasons are and take some action. As far as I can tell EA is still looking at things as a fluke, however on the other side of the fence things are definately starting to trend downward. Both in their pocket book and in how people speak of them....

  • yian

    Posted Aug 2, 2007 12:13 pm PT

    The only time I see Harry Potter game in action was in a public library. A kid was playing it. The texture looks pretty decent and the animations get the job done. I guess it isn't too bad if the target audience are the kids.

  • ps3ruler

    Posted Aug 2, 2007 12:06 pm PT

    what tasteless gamers buy harry potter games?
    Hopefully none of you guys do and theres 2 million prepubescent children out there who have yet to aquire a decent palate for gaming.

  • stfolife

    Posted Aug 2, 2007 12:01 pm PT

    "First most wii games are shallow and most of them are minigames. Only poor gamers are fed up with expensive consoles"

    the first part was true but the second was not for various reasons i own all three and i run a small private company of 26 employes handed down to me by my father so i am in no way of the lower class and i am fed up with "big expensive" consoles well the 360 to be specific so just please in the future speak for yourself and only yourself

  • hjgc5e

    Posted Aug 2, 2007 11:49 am PT

    Humorguy_basic what do you mean "anything 'modern' is struggling or failing as gamers get fed up with expensive consoles and shallow gaming."
    First most wii games are shallow and most of them are minigames. Only poor gamers are fed up with expensive consoles.

  • Humorguy_basic

    Posted Aug 2, 2007 11:39 am PT

    Simplistic reporting:
    'EA's shortfall came during three boom months for the US game-industry, which saw revenues grow 20 percent in April, 49 percent in May, and 31 percent in June......' Boom months for the GAME-INDUSTRY?! No. They were a boom for DS and Wii and half the increase due to Worlds of Warcraft. How does that become an industry wide boom? It's just pinpoints of huge growth in certain areas while a general demise occurs elsewhere. If DS games sell ten million more this month, and PC games sell 5 million less, you would call the market 'mixed' in any other industry. In the gaming industry you call it 'game market up 50%' by taking the 5 million decline from the 10 million DS increase and call it a 5 million increase! You don't want to talk the market down by pointing out the PC gaming decline would you? Even if you are supposed to report ALL the information!

    DS and Wii and anything 'retro' is booming. PS3, 360 and PC and anything 'modern' is struggling or failing as gamers get fed up with expensive consoles and shallow gaming.

  • UnrealPro

    Posted Aug 2, 2007 10:23 am PT

    And they had no problem with one white guy facing off against an entire village of Spaniards. Hypocritical retards.

  • ByeBye4545

    Posted Aug 2, 2007 9:23 am PT

    "bforrester" lol im sure EA cares if they lose one person as dumb as you as a customer

  • mr_killer_man

    Posted Aug 2, 2007 9:07 am PT

    Sony is about to make a realy big mistake! If they take the 60gb PS3 off shelves and leave us with the 40gb with no backwards capability. I don't want that one. I don't think too many people want that version so this makes buying games much harder since gas prices keep going up and down.

  • MythPro1

    Posted Aug 2, 2007 8:57 am PT

    If mindless people didn't consistenly buy the latest version of EA sequel franchises, that 4 percent would be much, much higher. I just saw the commercial for the new Madden 2008 game, and I overhear several people acting excited about it since they own all the others. I laughed so hard I crapped my pants.

  • comthitnuong

    Posted Aug 2, 2007 8:55 am PT

    They do have some big sellers coming out in the not so far away Fall so the loss shouldn't be there long.

  • blackace

    Posted Aug 2, 2007 8:53 am PT

    EA relies to much on sequel franchises for their profits. Games like The Sims, Madden, NBA Live, NFS, C&C, MOH, Harry Potter, Tiger Woods PGA, March Madness, etc.. are mostly reharshed each year with a few small changes. Gamers are tired of it and many are skipping 1-2yrs instead of buying the same game again and again. This is why EA's profits keep dropping each year. At least with Crysis & Spore, there's actually something new to look forward to from EA.

  • MythPro1

    Posted Aug 2, 2007 8:52 am PT

    Here's a reason why the Harry Potter sold so many units! And it has nothing to do with the title...none whatsoever *rolls eyes*

  • kevy619

    Posted Aug 2, 2007 8:26 am PT

    "Razzi65

    ds n wii r'nt kicking psp n ps3 badly...it just matter of time...wait for some time..."

    How long do we have to wait? by the time the ps3 gets going, the next xbox will be almost ready for release.

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