Electronic Arts 1Q net income more than doubles
Wednesday, July 27, 2011
NEW YORK (AP) — Electronic Arts Inc. more than doubled its fiscal first-quarter net income thanks to higher sales of video games such as “Portal 2,” “Crysis 2” and the soccer title “FIFA 11.”
The company said Tuesday that it earned $221 million, or 66 cents per share, in the three months that ended on June 30. That’s up from earnings of $96 million, or 29 cents per share, in the same period a year earlier
Revenue rose 23 percent to $999 million from $815 million.
Adjusted, it had loss of $123 million, or 37 cents per share, the higher end of its guidance. Its adjusted revenue was $524 million, down 3 percent from last year. On this basis, analysts expected a larger loss of 40 cents per share, on revenue of $510 million, according to FactSet.
EA’s adjusted results account for the effects of deferring revenue and the related cost of sales for games with online components. Like other video game publishers, the company spreads these out on its books over time, while the game is played, rather than all at once.
“This was another solid quarter driven by both digital and packaged goods,” said CEO John Riccitiello in a statement. “We saw strong digital revenue growth over the prior year. On packaged goods, ‘NCAA’ is off to a great start and pre-orders for ‘Battlefield 3’ are tracking extremely well.”
“Battefield” is EA’s answer to rival Activision Blizzard Inc.’s wildly popular “Call of Duty” series of military shooters. The company is also planning to launch a multiplayer online game, “Star Wars: The Old Republic” later this year. Like Activision’s “World of Warcraft” games, “Star Wars” players will pay monthly subscription fees to play.
For the current quarter, EA expects an adjusted loss of 13 cents to 3 cents per share and adjusted revenue of $925 million to $975 million. Analysts are expecting EA to break even, on adjusted revenue of $896.8 million.
The company recently announced that it plans to buy PopCap Games, a maker of casual games such as “Bejeweled” and “Plants vs. Zombies,” for at least $750 million. EA has been making an effort to grow its digital offerings, including mobile games and games on Facebook as more people flock to playing these types of games.
PopCap will be EA’s largest acquisition to date, but the company said the deal won’t affect its earnings in the current fiscal year. In fiscal 2013, which begins next spring, the acquisition will add at least 10 cents to adjusted earnings per share.
EA expects full-year adjusted earnings of 70 cents to 90 cents per share and revenue of $3.9 billion to $4.1 billion, up from its previous guidance of $3.8 billion to nearly $4.03 billion. Analysts expect earnings of 85 cents per share and revenue of $3.95 billion.
Riccitiello said EA is pleased to see that the NFL lockout has been resolved. The company makes the popular “Madden” football game series, which are licensed by the NFL and try to be as realistic as possible. The latest game launches on Aug. 30.
Shares of Redwood City, Calif.-based Electronic Arts climbed 39 cents to $24.20 in after-hours trading. The stock had closed down 26 cents at $23.81.
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