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EA losses widen to $322m

Announces $600m stock repurchase; Dead Space 2 outsells original 2:1, Medal of Honor and Hot Pursuit sell over 5m units

Electronic Arts has reported a loss for the third quarter ended December 31 of $322 million (199.4m), compared to a loss of $82 million for the same period in 2009.

Total sales for the period were $1.053 billion (652.1m), also down on the $1.243 billion in the previous third quarter.

Digital sales accounted for $211 million (130.6m) compared to $152m in '09, packaged goods up from $929 million to $1.108 billion (686.2m), but distribution was down to $91 million (56.3m) from $265 million.

The publisher's board has also announced the authorisation of a stock repurchase program of up to $600 million of Electronic Arts stock over the next eighteen months - a move that CEO John Riccitiello said "demonstrates our confidence in EA's digital strategy."

Highlights for the quarter were sales of the recently launched Dead Space 2 which were double those of the original, and Medal of Honor and Need for Speed: Hot Pursuit, both of which have passed 5 million sales during the period.

EA also said it was the number one publisher on Xbox 360 and PlayStation 3, the App Store and Microsoft Windows Phone 7. FIFA 11, Madden NFL 11 and Battlefield: Bad Company 2 have also now sold over five million units since launch.

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Latest comments (14)

Private Industry 5 years ago
With two games selling more than 5 million, good sales for Dead Space 2, likely good sales for the sims and probably good sales for the Sports games how is it possible to still lose 322 million?
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Andrew Wilson 3D Artist 5 years ago
I wish publishers released figures for games that didn't do well (they may do, but I've only seen estimates).
It would be interesting to see how good games like Mirror's Edge, Skate 3 and Deathspank performed. It would also help to know which games made losses, or sold very few units and would help us understand where the money went!
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Stephen Northcott Senior Consulting Engineer 5 years ago
@Werner Too many Chiefs (getting paid way too much) and not enough Indians.
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Show all comments (14)
Well, at a Guesstimate:

Alot of accounts from 2009 being carried till Q4 2010?

1/ Nov 2009 - Playfish acquisition $225 M
2/ Oc 2010 - Chillingo acquisition $20 M
3/ 1500 layoffs - severance pay + leftover from merger of Bioware/mythic

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Tom Keresztes Programmer 5 years ago
Not too bad, considering that last year (or the one before it) it was more than 800 million in the red.
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Alfonso Sexto Lead Tester, Ubisoft Germany5 years ago
@Werner
I was going to say exactly the same, so no more comment to add.

The problem in EA (in my opinion and experience) is the lack of organization and a decent marketing... Some people there work nicely; others are just not the most apropriate people for the job (lets just leave it there), and about marketing... Who the hell in marketing though it was a good idea to release "Need for Speed World" the very same day Blizzard released "Starcraft 2"?

Figures...
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Joe Bognar Junior PR Manager, Techland5 years ago
@Alfonso I think the problem with the same release date for the two games must have been caused by the fact that EA probably has more than 1 Marketing division within the department. They assign a team to every game. Therefore I can only think of lack of communication... Happens. It shouldn't (!), but it does. :)
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Rafael Brown Lead Designer, id software5 years ago
@Joe - Starcraft 2 is published by Activision Blizzard, Need for Speed World is published by Electronic Arts. This is not a case of the same publisher with two marketing groups not talking to each other. This is a case of EA's marketing dept not realizing that their timing is horrible, if they plan to publish an experimental MMO spin off a brand that is not traditionally an MMO (NFS) targeted at Asia on the same day as a game (Starcraft 2) whose prequel is still played competitively (and televised and sponsored) in Asia more than ten years after its release.

Edited 1 times. Last edit by Rafael Brown on 2nd February 2011 4:00pm

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Al Rhodes Web producer/designer 5 years ago
Well God knows what it costs to license FIFA, Tiger Woods, the NFL, Star Wars, Harry Potter (need I go on) yet the recent EA output that gamers actually want most and have the makings of a valuable franchise are the original titles ...Dead Space, Dragon Age.

I'd have a think about that if I was involved in EA strategy.
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Raf Keustermans CEO, co-founder Plumbee 5 years ago
The title & article is a bit misleading, to be honest. The problem lies in the way EA accounts for certain things, vs how Wall Street accounts for things: the famous GAAP vs non-GAAP discussion. In EA's books, they made a profit of $200M+ last quarter. The difference between this & the $300M loss (GAAP) can be explained by thing like deferred revenue from certain digital products.
It looks like investors & analyst are buying into EA's accounting rules: share is up 15% today & all analysts are rather happy with the Q3 results.

Some numbers & more background info here (Pdf):
http://files.shareholder.com/downloads/E...

Edited 1 times. Last edit by Raf Keustermans on 2nd February 2011 4:42pm

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J. Goldmaker Community Management 5 years ago
Reminds me of Capitalism 2 when I had to take back control of the company. Bring down the value and then buy up all the shares.
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I find it astounding that any company can make a loss of $3m/day, over the Xmas quarter. If the share price is up, its probably due to the share buyback.
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Tim Spencer Level Director, TT Fusion5 years ago
You're all forgetting that this report is compiled using the GAAP system (a system which takes into account certain non-loss items as loss items, therefore pretty rubbish and inaccurate).

The non-GAAP report for the period show profits nearly doubling to $196 million and revenue increasing slightly to $1.41 billion!

...basically, use the GAAP system if you want sensationalist/bad news to make people read your article more. Use the real figures if you actually want to know the real deal.
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Jean Toledo5 years ago
Plain English - we can't rely on GAAP-based reports to see the truth. Wouldn't be easier to see a 3-line report with: gross revenue, due debits and net profit?? ;-)
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