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EA stock drops 6.4% on financial results

Losses and job cuts see share price fall back, after gains made late last week

Shares in Electronic Arts lost 6.4 per cent of their value yesterday as the market reacted to the publisher's financial results, which detailed widening losses and plans to cut a further 1500 jobs.

The news resulted in the stock dropping to USD 18.29 by yesterday's close, wiping out the gains it had made late last week, when it had reversed a downward trend dating back to the middle of October.

Problems for the company first aired a year ago when the publisher announced plans to lay off 600 staff in a bid to save around USD 50 million.

That was a move in response to the global economic slowdown, but in particular to consumer spending in October 2008, and CEO John Riccitiello said then that the company was being "cautious in the short term".

"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."

But this year the company has had to go further in an attempt to make a further annual cost saving of USD 100 million as the latest round of job cuts were announced - along with the cancellation of a number of videogame projects.

"This action will result in the closure of several facilities and a headcount reduction of approximately 1500 positions, of which 1300 are included in a restructuring plan," read a company statement at the beginning of this week. "This plan will result in annual cost savings of at least USD 100 million and restructuring charges of USD 130-150 million.

"EA remains committed to delivering high quality games for consumers and leading the industry in the growing digital direct gaming sector," it added.

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