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Finance

EA stock plummets on job losses announcement

Mon 03 Nov 2008 8:56am GMT / 3:56am EST / 12:56am PST
Finance

Publisher's plans to save $50 million prompts share price to plunge 18 per cent

Electronic Arts' share price has plummeted by almost 18 per cent following last week's announcement that the company was to cut 600 jobs in a bid to save USD 50 million.

The stock was down USD 4.95 to USD 22.78, slashing around USD 1.3 billion off the company's value on fears that the videogames industry might not be recession-proof after all.

"Considering the slow down at retail we've seen in October, we are cautious in the short term," CEO John Riccitiello said on Friday. "Longer term, we are very bullish on the game sector overall and on EA in particular. The industry is growing double-digits on the strength of three new game consoles and increases in the number of homes with broadband internet connections."

"EA is continuing to make progress against our business plan, but we have the constant imperative to keep our costs in line as we grow our revenues and improve our margins."

The publisher has seen its stock value fall from around USD 60 in the past twelve months, although some latent volatility remains from the global financial meltdown over the past few weeks.

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