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EA lays off 600 staff to save $50 million

Riccitiello cites retail slowdown in October as losses widen to $310 million

Publishing giant Electronic Arts is to implement a cost reduction plan resulting in the loss of around 600 jobs, or six per cent of the workforce.

The company announced the decision following financial results for the quarter ended September 30, which showed losses had increased considerably from USD 195 million last year to USD 310 million.

"EA announced today a cost reduction plan, which will include the elimination of approximately six per cent of the Company's workforce. The company estimates its cost reduction plan will result in annual pre-tax cost savings of approximately $50 million," said EA.

Madden NFL 09, Spore, Mercenaries 2, Tiger Woods PGA Tour 09 and Warhammer Online all helped push overall revenues up 33 per cent to USD 864 million, up from 650 million for the same period last year.

EA's chief executive John Riccitiello stated that the company had felt a slowdown at retail during October, only days after the company's UK boss Keith Ramsdale said it was too early to determine the impact of the current economic downturn.

"Considering the slow down at retail we've seen in October, we are cautious in the short term," said Riccitiello.

"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."

As well as the lay-offs, the company will reduce new hires planned for this year and close some positions entirely.

"Decisions that impact people's jobs are always extremely tough but all of the people affected will be treated fairly and respectfully," offered EA's Mariam Sughayer in a statement to the press.

"We will also reduce hiring and close some open positions that we had previously planned to fill this fiscal year."

The redundancies will be worldwide with all studios and departments renewing positions.

"All parts of EA have reviewed their team sizes to adjust employee numbers. The goal is to ensure we're resourced in a way that allows us to continue to grow our revenues while at the same time keeping our costs under control and improving profitability. These changes will be announced to affected staff starting October 30," added Sughayer.

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Matt Martin avatar
Matt Martin: Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.
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