Electronic Arts Shares Tumble after Weak Results

Monday, 07 May 2012 04:47 PM

 

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Electronic Arts' adjusted profit fell in the fourth quarter and it lost 400,000 subscribers of "Star Wars: The Old Republic" in the quarter, dealing a blow to efforts to rely on the new game for future growth and sending the game maker's shares down about 10 percent in late trading Monday.

EA has poured more money and firepower into "Star Wars: The Old Republic" than it has any game in its 30-year history. Wall Street is closely watching to see if the game can succeed, since it could bring EA riches for years to come. If it struggles, EA's earnings will be hurt in future quarters.

Interim Chief Financial Officer Ken Barker said in an interview that EA is pleased with the stability of the game, but it wants to drive the subscriber base up with the release of two content expansion packs this quarter.

The subscriber numbers EA reported on Monday were on the low end of some analyst estimates. Sterne Agee analyst Arvind Bhatia expects the company to have 1.25 million to 1.5 million subscribers.

EA now expects EPS to be in the range of $1.05 to $1.20 per share for the year on revenue of $4.3 billion. Analysts on average are expecting EPS of $1.12 a share on revenue of $4.49 million, according to Thomson Reuters I/B/E/S.

For the fiscal first quarter, the company expects EPS to be a loss of 45 cents per share to 40 cents per share.

The company posted total revenue of $1.37 billion, compared with $1.09 billion a year ago for the three months ended March 31. Its net income rose to $400 million, or $1.20 per share, compared with $151 million, or 45 cents per share a year ago. Its futuristic game, "Mass Effect 3" helped drive sales, the company said.

Adjusted for the deferral of digital revenue and other items, the company said profit fell 33 percent to $56 million, or 17 cents per share. Adjusted revenue fell 2 percent to $977 million, which beat analyst estimates of $957.85 million, according to Thomson-Reuters I/B/E/S.

The company's digital revenue hit $1.2 billion in the fiscal year. Its shares fell to $13.58 in after market trading after closing at $15.13 per share on Monday.

© 2014 Thomson/Reuters. All rights reserved.

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