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EA to close 12 facilities following $641m loss

Wed 04 Feb 2009 6:28am GMT / 1:28am EST / 10:28pm PST
Publishing

Publisher to increase redundancies across group and narrow portfolio to further reduce costs

Electronic Arts has reported a USD 641 million loss for the third quarter, a massive increase over the USD 33 million loss recorded for the same period last year.

In a bid to further cut costs, the publisher has said it will close 12 of its facilities and increase redundancies to 11 per cent of the workforce, or 1100 members of staff.

"This includes headcount at all levels; staff, managers, directors, and VPs and above, and across all functions and geographies," said Eric Brown, chief financial officer.

"Most of the reductions are in high cost locations. We expect three quarters of the reduction to be completed by fiscal year end. We are also eliminating myriad increases in fiscal 10. We continue to take advantage of low-cost locations," he detailed. "At the end of FY09, we expect to have 19 per cent of our employees in low-cost locations versus 13 per cent a year ago."

There are also plans to reduce its portfolio of games to 50 in the 2010 financial year, over 125 SKUs.

For the quarter, revenue was up 10 per cent to USD 1.65 billion, with USD 88 million in deferred revenue from online games.

"Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009, a clear disappointment," commented John Riccitiello, CEO.

Despite the loss, Riccitiello stated that product quality was high compared to rival third-party publishers.

"We delivered on game quality and innovation in calendar 2008, with 13 titles 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."

"Given our recent performance and the current economic environment, we are aligning our cost structure with a lower projection of revenue, resulting in approximately $500 million of operating expense reductions in fiscal 2010 as compared with our previous plans," added Brown.

FIFA 09 was EA's best selling title for the period, with 7.8 million copies in the hands of consumers. Need for Speed Undercover sold 5.2 million copies, while Littlest Pet Shop shifted 2.8 million units.

Warhammer Online: Age of Reckoning ended the quarter with 300,000 paying subscribers, according to EA.

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