Medal of Honor, Hot Pursuit ship 5 million

If there's one quarter where a publisher wants to best its performance from the prior year, it's the highly lucrative holiday window. Unfortunately, such was not the case for Electronic Arts.

Today, the megapublisher issued its third-quarter earnings report for the October-December window, revealing net revenue fell 15 percent to $1.05 billion, down from $1.24 billion during the year prior. Net losses also mounted during the period, plummeting to $322 million from an already-substantial $82 million last year.

EA was quick to point out that excluding non-recurring charges such as acquisition-related expenses, changes in deferred net revenue, and restructuring charges, the publisher actually had a quite strong quarter. Excluding these non-recurring expenses, EA's non-GAAP net revenue would have been up 75 percent to $1.4 billion. Profit would also be a different story, with the publisher's massive loss turned to a $196 million gain.

As for wins during the quarter, EA touted the fact that it was the No. 1 publisher on the Xbox 360 and PlayStation 3 during 2010 in Western markets. In Western markets during the third quarter, EA said that it held the No. 1 publisher slot on Apple's App Store for both the iPhone and iPad, as well as Microsoft's Windows Phone 7 platform.

EA also saw production out of two of its top holiday-quarter releases: Danger Close's Medal of Honor and Criterion's Need for Speed: Hot Pursuit. Both titles have shipped more than 5 million units to date, according to the publisher. In 2010, EA had five games which passed the 5 million mark, with the aforementioned two joined by FIFA 11, Madden NFL 11, and Battlefield: Bad Company 2. FIFA 11 has now shipped more than 11 million units to date.

Not all of the publisher's year-end games performed, however. In a post-earnings conference call, EA indicated that EA Sports Active 2 sales came in "well below expectations." Active 2 was the first installment in EA's fitness franchise that was released for Microsoft and Sony's new motion-sensing controllers. Like the original, it was also released for the Wii.

EA also continued to grow its digital business, which ticked up 39 percent to $211 million during the quarter on a non-GAAP basis. EA reaffirmed its position that 20 percent of its in-progress fiscal-year earnings--or $750 million--will be from digital sales. Console downloadable content sales saw the largest digital gains, growing 130 percent to $62 million. PC digital revenue grew 22 percent to $82 million, while mobile sales were up 16 percent to $67 million.

On the business side, EA said that it has authorized a $600 million stock buyback program that will take place over the next 18 months. Looking ahead, the publisher said that it expects net revenue to come in at $3.473 billion to $3.573 billion for the full fiscal year ending March 31, 2011.

Investors have thus far reacted positively to EA's earnings announcement today. In after-hours trading, the stock was up nearly 9.15 percent to $17.05.