Sign on Options
Theme:
To Dark

EA suffers $641 million Q4 loss, increases layoffs to 11%

Publisher posts disappointing holiday quarter, increases job cuts; game delays pull down full-year guidance to $4.2-$4.25 billion; Warhmmer OL subscribers drop to 300,000.

Electronic Arts may have had one of the most robust lineups of new intellectual property in 2008, but the publisher continues to struggle to turn a dime. Today, the Redwood City, California-based publisher announced third-quarter earnings for the all-important holiday period, and in the words of EA CEO John Riccitiello, the results were "a clear disappointment."

It sold 5.2 million copies, but EA still considers Need for Speed Undercover a bit of a lemon.

It sold 5.2 million copies, but EA still considers Need for Speed Undercover a bit of a lemon.

For the October-December quarter, EA posted total net revenues of $1.65 billion, up $151 million from the year-ago period. That figure is substantially tempered by EA's total losses for the period, which grew to a staggering $641 million compared to $33 million from the year prior. As noted by EA, the publisher was heavily weighed down by a goodwill impairment charge of $368 million related to its wireless business as well as a $244 million charge pertaining to deferred tax assets.

"Our holiday quarter came in below our expectations, and we have significantly reduced our financial outlook for fiscal 2009," said Riccitiello in a statement. "We delivered on game quality and innovation in calendar 2008, with 13 games rated 80 or above, more than any third-party publisher. We expect to build on this great-quality record in the year ahead while delivering more profitability."

EA also announced today that it plans to reduce head count beyond its previous 10 percent estimate. EA now expects to cut its workforce by 11 percent, or 1,100 employees, as well as close 12 facilities, "narrow its product portfolio," and eliminate certain other costs. The publisher has already enacted a number of these cuts, with such studios as Skate 2 and Need for Speed developer Black Box and Madden NFL office EA Tiburon both having confirmed layoffs in the past month.

As a result of the grim holiday quarter, EA said that it would once again be lowering its full fiscal-year outlook. For the year ending March 31, EA now expects to pull in between $4.2 billion and $4.25 billion in fiscal 2009, with a loss per share of between $3.29 and $3.56.

In news that would also impact the publisher's lowered forecast, EA said that it would be bumping a trio of games out of fiscal 2009. The Sims 3, which had previously been expected on February 20, is now expected to arrive on June 2. BioWare's Dragon Age: Origins, which had been penciled in for a PC launch before the end of March, is now slated for the back half of 2009. Finally, Godfather II will move beyond its announced February 24 date, though no updated release window was revealed.

Even with the unsettling performance, EA had a number of wins to tout during the quarter. Despite continued pressure by Activision Blizzard, EA claimed the title of top North American publisher for the quarter, capturing a 20 percent share of sales according to data provided by the NPD Group. The publisher also said that MTV Games and Harmonix's Rock Band (which EA distributes through its EA Partners program) was the best-selling cross-platform game in North America during calendar-year 2008, according to NPD.

The publisher's best-selling game for the quarter was the well-rated FIFA 09, which logged global sales of 7.8 million. Need for Speed Undercover was another top performer, selling 5.2 million copies worldwide. That figure is slightly off from Undercover's predecessor, ProStreet, which had sold 5.5 million units during the same period last year. The publisher also provided a disheartening update on EA Mythic's Warhammer Online, saying that the massively multiplayer online role-playing game's subscriber base has dwindled to 300,000 through the end of December. In October, the game boasted more than 750,000 registered users.

174 Comments

  • ljm69ljm

    Posted Jun 2, 2009 12:02 am GMT

    What would we all do without FIFA, Need For Speed and The Sims!?

  • BallOBaseSimmer

    Posted Mar 13, 2009 7:19 pm GMT

    I'm not surprised that they did their best work on their FIFA soccer line. It's by design that the product they picked to improve most concentrated on a global best selling sport rather than the usual domestic pastime titles that they neglect. But if this means that there will be less patch support for other games that were rushed, then consumers will stop buying new games and EA losses will continue. Fans will no longer settle for retail beta test releases. And you can't just blame the economy on bad games that don't work.

  • flawless_blade

    Posted Mar 6, 2009 9:29 pm GMT

    THATS WHAT U GET FOR DELAYING THE SIMS AND DRAGON AGE!!!! MUAHAHAHAHAAH

  • harrykotiej

    Posted Mar 3, 2009 6:45 am GMT

    You know what's stupid? They are launching The Sims 3 in the summer holidays! Do they expect us in Europe (where many counties have their own language), to, when we are going somewhere else, take our computers with us and then buy the game in a different language to play it? Well, my answer is: Nope. :S Now I hope the Mac version will actually launch the same year.

  • brendanhunt1

    Posted Feb 27, 2009 3:39 pm GMT

    release the sims allready and you wont lose everthing

  • mariet

    Posted Feb 21, 2009 8:08 am GMT

    The only reason that this company is still standing thanks to The Sims, that would be in the same circumstances as Midway: on the brink of bankruptcy.

  • black_ace3

    Posted Feb 10, 2009 8:33 pm GMT

    EA is suffering retribution for using SecuROM in their games...

    I admit, I have quite a few games that have EA branded on the boxes, but I own no game made by EA or any of their studios.

    I feel no sympathy for them at all.

  • P90E21

    Posted Feb 10, 2009 11:52 am GMT

    Just think of all the studio's that may come back into the light. I mean if you cut off so many I'm sure some will just go open there own studio and when times get good I bet EA will want to buy them. Oh and thank god they didn't get a hold of Take 2

  • sharpshooter188

    Posted Feb 6, 2009 12:41 pm GMT

    Black was garbage. Its like they were trying to go for realism but then werent. They were looking at the guns the whole time and didnt try for variety. Not even a damn multiplayer which wouldve EASILY helped it out. EAs just a dumb company overall. I feel sry for the lower ends employed by it. They sponsor ridiculous ideas, or if it is somehow a good idea its poorly executed. I avoid anything with an EA tag on it anymore.

  • enoslives7

    Posted Feb 6, 2009 11:01 am GMT

    "Black" was a good EA game, but their sports games are pure rehashed crap.

  • Kalundume

    Posted Feb 6, 2009 10:37 am GMT

    It always makes me pleasure to hear that this game cartel company suffers some losses. Hail the economical crisis ! After they have wasted Ultima, Sim City and other franchises I eagerly wait a day when their managers are fired or finish like Madouff and the company is finally dead. I thank them for SecuROM as well. Unfortunately they have bought my favourite CRPG maker too, Bioware, lets hope it does not mean the end of this excellent developer !

  • YoJim8obaJoe

    Posted Feb 6, 2009 6:49 am GMT

    Teach em for making 10 crap games for every good one,and making nothing but sequels that hardly ever add anything new,IE madden fifa and any other sports tripe they have rights for

  • saraphin

    Posted Feb 6, 2009 4:37 am GMT

    EA is making the wrong move. They are raking in tons of cash and if anything, they should be diversifying, not cutting down. Look at history; keep people employed, hell, hire more. You got the brains and the balls to ride it out. Games are always gonna be bought; it's a huge industry. EA has to lead the pack, screw the fear mongers. Why was Dragon Age pushed back? Too scared to put it in stores? Cause you can't tell me that the Bioware guys didn't give you product. Did corporate say "lets release an RPG during Xmas?" Hmmm.

  • timeforme23

    Posted Feb 5, 2009 9:41 pm GMT

    wth? i love ea! but with delays i hate it only but you have to addmitt it does sell some good games i am an ea lover who here is with me?!

  • tarantyno

    Posted Feb 5, 2009 9:37 pm GMT

    People should stop bashing EA for not making each game perfect and give them some freakin credit! Or maybe most of you were bourne in the late nineties and dont remember how many coolness they brought to the gamers... Remember the first Medal Of Honor?...need 4 speed porsche?...and all the Fifa games back from more then a decade ago?....what about now? MIRRORS EDGE , DEAD SPACE, BATTLEFIELD BAD COMPANY, AND BURNOUT PARADISE (wich is also a FLAWLESS pc port too) ........ There cant be all good apples on a tree

  • Cody13_2012

    Posted Feb 5, 2009 8:23 pm GMT

    Can't say I didn't see this coming. I'm glad this is happening because now EA is finally starting to release/make good games.

  • Desulated

    Posted Feb 5, 2009 8:14 pm GMT

    EA is more on the quantity side over quality.

  • shamarke

    Posted Feb 5, 2009 3:33 pm GMT

    undercover sucked, it hurts for EA

  • Chizaqui

    Posted Feb 5, 2009 10:33 am GMT

    Down with the EA MACHINE!!! finally, a reprieve for all the buy ups that were ruining the industry

  • Hoohahhee

    Posted Feb 5, 2009 3:36 am GMT

    Goodwill goes through annual impairment tests and any write downs will be audited. Using Goodwill impairment to manipulate revenue is considered creative accounting in some jurisidictions.

  • Hoohahhee

    Posted Feb 5, 2009 3:33 am GMT

    Dear Eric_Neo3,

    Your hypothesis will be correct if losses borne by goodwill impairment creates a net loss that would, at first glance, entitle the firm to tax relief. But in filing corporate tax, goodwill is not tax deductible and will have to be added back to NPBT to arrive at the tax-adjusted taxable income. This applies to most jurisdictions, unless US GAAP stipulates otherwise, and i doubt so. There is no apparent benefit to be derived from impairing goodwill, save for manipulating financial ratios such as return on assets to boost their financial statements. Given such a writeoff is more likely to turn away investors, it makes little sense.

  • bobasweat

    Posted Feb 5, 2009 2:32 am GMT

    oh it's not my utter ignorance, they are pish
    i am dreading the old republic coming out, as i don't want to walk through a mos eisley that has EA hoardings at the side of the road, a bmw landspeeder and a coke machine in jabba's palace

  • TehUndeadHorror

    Posted Feb 5, 2009 2:07 am GMT

    @bobasweat
    EA have change despite your utter ignorance. I mean don't get me wrong, there was a time I utterly hated EA for pumping out crap after crap, year after year, but they really have changed since then.

    Sure Need For Speed is still declining in popularity along with their sport games, but other than that they have been making quite a few original and worthwhile games these few years! Don't judge EA by their horrid history 'cause they really are trying for a new start. =)

  • jonneymendoza

    Posted Feb 5, 2009 1:37 am GMT

    same here. i hate EA. they delayed sims 3 and otwo other big titles because of "marketing" reasons and then they give a big F U to all us pc battlefield 2 players that made the franchise popular by giving us a BF heroes a piss poor mario style third person pile of poo.

    To sum it all up they go off and make a battlefiled bad company 2 sequal and leave us pc users dry once again with no battlefield 3 sequal

  • bobasweat

    Posted Feb 4, 2009 11:46 pm GMT

    excellent news
    there isnt a company in the world i'd like to see go under more than EA

  • eric_neo3

    Posted Feb 4, 2009 7:40 pm GMT

    Hoohahhee Your post about the accounting would be correct if the goodwill was not related to their wireless business, but it clearly said "As noted by EA, the publisher was heavily weighed down by a goodwill impairment charge of $368 million related to its wireless business"

    In sort they are just using goodwill to artificially create a loss, maybe to avoid taxes that come with profits or it could because they get assistance tax wise if they make a loss for the financial period.

  • plm3d_basic

    Posted Feb 4, 2009 6:58 pm GMT

    What surprises me is that Pro Street and Undercover both sold over 5 million copies.

  • Langway

    Posted Feb 4, 2009 6:56 pm GMT

    Most of this was due to charges they knew where coming. A majority of the rest relates to lower than expected retail orders from the holidays. Stores buy less, EA makes less $$. If you've been to your local big box lately, and noticed sparse shelves, it's not because they are selling out of stock. It because they are ordering less, and maintaining a smaller stock to sale margin.

    If the economy was in good shape, and retail orders where up, everyone would be buying EA games like normal. They still would have had the short fall though, as the aforementioned charges where coming up on them regardless of the economy. The difference this time though is the economy. Under normal healthy conditions, lay-offs could have been avoided, or greatly maligned. But as things stand now, no company would risk a repeat of this kind of performance under present conditions.

    If you are glad this happening to EA, that's your business. I personally find a diamond in the rough with their games from time to time. I don't hate them, I distrust them. I hope everyone gets back on their feet soon. What I hate is seeing honest, hard working people, left with no future prospects to support themselves or their families.

  • GabeBlack

    Posted Feb 4, 2009 4:30 pm GMT

    600 million in losses? Thats pretty much what they paid for Bioware. I am not surprised in the least by this nor should anyone else.

  • DeadBullet

    Posted Feb 4, 2009 3:55 pm GMT

    Im very glad this happened...

  • Vainamoinen82

    Posted Feb 4, 2009 3:45 pm GMT

    Warhammer Online deserves to have more than a mere 300,000 subscribers.... Oh well, looking forward to Dragon Age: Origins.

  • pure_impact

    Posted Feb 4, 2009 3:28 pm GMT

    Well it looks like EA is paying for trying to monopolize everything as well as drumming out rehashes of many of their games. If they still allowed 2k sports, SCEA and others to make NFL licensed games, I strongly believe they wouldn't be in a such a gaping hole. People get tired of shelling out $50-60 bucks on a game just for roster updates. Why do that when you can create guys yourself?
    As for the Need for Speed franchise..I think it has run its course on having big ideas and people are seeing it as a rehash of sorts too.
    Lastly, EA made a big mistake in not staying in positive talks with Def Jam, because i'm sure a Def Jam fighting game with online exclusives/DLC on all platforms would be a big hit. And lets not forget that most people still buy and use their PS2's, so NOT marketing to that audience has been a downfall for many companies too. As good as the new gen systems are, lots of users have a huge library of PS2 games that they just aren't going to up and abandon. Plus with impending price drops this year on 360 and PS3 yet again, it makes the PS2 owner the smarter consumer due to better decision-making. And lets face it guys, gaming is a VERY expensive hobby/leisure/habbit/distraction nowadays in this bad economic time.

  • kwanzudood

    Posted Feb 4, 2009 3:26 pm GMT

    the $641 million Q4 loss does look huge, but the goodwill impairment charge and the loss from the deferred tax assets aren't real operational losses, they're impairments of value. a better indicator of EA's performance would be it's income/loss from operations. this is just my two cents, i'm a CPA (Certified Public Accountant) for PricewaterhouseCoopers and a gamer in my spare time.

  • GameFreak523

    Posted Feb 4, 2009 3:01 pm GMT

    Dude, if EA ever goes out of business, The gaming industry will not be the same. Lets just hope this gets resolved before anything drastic happens.

  • FraserAlexander

    Posted Feb 4, 2009 2:50 pm GMT

    EA's 'core' studios suck anyway like Tiberon - they flat out suck! their satellite studios who were acquired in the past 2 years and are allowed to function more independently are the only things that shine in EA land. The more 'EA' is involved as a company, the worse the games are. For example EA bought Bioware makers of Mass Effect, you'll see that Mass Effect 2 will be awesome, because EA won't influence any of it other than it's release and marketing.

  • Skreb-Masters

    Posted Feb 4, 2009 2:19 pm GMT

    It's a shame they're making a loss when they're recently making original games. Hopefully stuff like Dead Space and Mirror's Edge are still made as well as the usual annual releases and tie-ins.

  • forhekset

    Posted Feb 4, 2009 1:47 pm GMT

    Hopefully nothing good gets axed when they 'narrow' their 'portfolio'.

  • morganja

    Posted Feb 4, 2009 1:41 pm GMT

    I don't buy EA games. They show disdain towards their customers, their DRM is a huge hassle on those of us who pay for our games, and I will not ever buy another game from them. I should never have to go through a huge hassle just to play a game that I paid $55 for. It's too bad, because some of their games look interesting. But not worth the hassle.

  • Raider_0593

    Posted Feb 4, 2009 1:39 pm GMT

    $641 closer to going outta business, huzzah, everyone rejoice! Haven't played a decent game with their name on it in ages and I've played a lot of their games.

  • metalhead004

    Posted Feb 4, 2009 1:26 pm GMT

    Too bad. I would be willing to support EA if they didn't have DRM on their PC games. As it is, they will get nothing from me.

  • modem22

    Posted Feb 4, 2009 1:07 pm GMT

    They sold Tens of millions of games but their other businesses are dragging the company down. Get better EA!

  • RE4_Tipsters

    Posted Feb 4, 2009 12:51 pm GMT

    i love ea skate 2 was great but WTF sims 3? I love sims and it gets pulled back like 4 months?

    Rockstar Games is the best though.

  • Gamer_4_Fun

    Posted Feb 4, 2009 12:40 pm GMT

    Thats sad, I love the new EA with Dead Space, Mirror's edge. The only thing i didn't like was the 15$ for Adidas Live! season!

  • BigBad95

    Posted Feb 4, 2009 12:31 pm GMT

    Maybe they would make more money if they stop making PC games with DRM

  • DecadesOfGaming

    Posted Feb 4, 2009 12:06 pm GMT

    641 million loss.. bet that hurt.. I love it when huge companies loose cash.

  • alexLmx6

    Posted Feb 4, 2009 11:36 am GMT

    i deff agree with amir29 ive been a need for speed fan since i was a little kid and i played undercover once and didnt bother again i would much rather have waited another year for them to make the game worth playing, but unfortunately theyre only looking for the money and undercover still sold even though it was lousy, the only game that hasnt been a huge dissapointment from ea is skate 2, and even then, theres so many things in that game that just baffle me (like improperly mapped and stretched textures, such a dumb thing to overlook) but best of luck to anyone whos being laid off

  • akiwak

    Posted Feb 4, 2009 11:21 am GMT

    EA got too big and bloated that during rough times it doesn't get to be as flexible. They did change their view but it might be the case of too little too late???

  • zeckle_1

    Posted Feb 4, 2009 11:07 am GMT

    Put out some decent games instead of these half-arced efforts you've been doing as of late and you should bounce back in no time... Hmmm actually on second though...

  • simonsworld

    Posted Feb 4, 2009 11:04 am GMT

    Big deal so they will have to becareful with there cash that they so often splash, maybe now games will have more time and effort put on them, and the only sad thing is the job loss bit,look at the company of heros guys relic, or valve entertaiment for the half life/counter strike series, independent companys are great EA might now try and improve, we can all hope, the games industry will be ok, its no epicdemic just yet.

Subscribe to GameSpot's YouTube Channel

Hot Stories

Newsmakers

Featured Stories

Tags

ea

Submit News

Got tips? Send them in!

Related Game

The Sims 3

The Sims 3 Boxshot
Follow:
  1. Not Following
    Xbox 360: Follow
  2. Not Following
    PC: Follow
  3. Not Following
    PlayStation 3: Follow
  4. Not Following
    Wii: Follow
  5. Not Following
    3DS: Follow
  6. Not Following
    DS: Follow
  7. Not Following
    iPhone/iPod: Follow
  8. Not Following
    Macintosh: Follow
  9. Not Following
    Windows Mobile: Follow
  10. Not Following
    BlackBerry: Follow
Add to List
  1. Xbox 360
  2. PC
  3. PlayStation 3
  4. Wii
  5. 3DS
  6. DS
  7. iPhone/iPod
  8. Macintosh
  9. Windows Mobile
  10. BlackBerry

Follow for the latest news, videos, & tips from experts & insiders

GameSpot Fuse
    Platforms:

    Related Games

    Site Blogs