Wednesday August 2, 2006 4:49 am
EA Reports Financial Results
Electronic Arts today reported their preliminary financial results for their first fiscal quarter. The period ended on June 30, 2006, and while gross profit for the quarter was up 14 percent to $245 million, the company still reported a net loss of $81 million. Net revenue was up in both North America and Europe, but down in Asia. In this quarter, EA saw increased revenue from 2006 FIFA World Cup, with the tournament raising the game’s profile. CEO Larry Probst believes EA is positioned well to take advantage of the holiday launches of both the Playstation 3 and Nintendo’s Wii, and the continued growth of the Nintendo DS. EA holds its position as the leading publisher for the Xbox 360, and Probst stated that EA is “on schedule with strong support for the launch of PlayStation 3 and we have increased our development efforts for the Nintendo DS and Wii.” EA’s fortunes are tied closely to the success of the various hardware platforms; their projections for the upcoming year are based on successful launches for both the Wii and the Playstation 3. The company still projects to lose money in the second quarter, which typically is not a strong driver of sales. For the full fiscal year, EA estimates earnings per share to range between net losses of $0.30 per share and break even. Given the risk involved with the Playstation 3 launch, EA’s goal of reaching break even during the fiscal year would seem to be optimistic.
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