Electronic Arts announced today that it's lowering both GAAP and non-GAAP net revenue and earnings per share for the fiscal year ending March 31, 2010. The news comes only a couple months after the publisher had to announce 1,500 layoffs (which included the closure of Pandemic).
EA said its revised expectations for the full year are "primarily the result of weakness for EA and the overall packaged goods sector in Europe in December, and a product mix shift to lower margin distribution products in the December quarter, primarily in North America."
For the third quarter (the holiday period ended December 31), EA now expects GAAP net revenue between $1.227 billion and $1.247 billion. GAAP loss per share is expected to be in the range of $0.24 to $0.32. Meanwhile, non-GAAP net revenue is expected to be $1.33 billion to $1.35 billion, and non-GAAP earnings per share are expected to be in the range of $0.29 to $0.33.
For the full year, EA had been looking at net revenue guidance of $3.6 billion to $3.9 billion, but now the company is expecting GAAP net revenue to be $3.6 billion to $3.675 billion. GAAP loss per share has been changed from the previous $1.20 to $2.05 to guidance of $1.94 to $2.24. The company noted that this new guidance does not include the "impact of tax-related charges that may arise in connection with the Playfish integration."
From a non-GAAP perspective, net revenue is expected to be $4.125 billion to $4.2 billion for fiscal year 2010 (compared to prior guidance of $4.2 billion to $4.4 billion), and non-GAAP earnings per share are expected to be in the range of $0.40 to $0.55 (compared to prior guidance of $0.70 to $1.00).
Investors, who have not had much patience with EA, reacted immediately as EA's stock tumbled more than 10% in after hours trading. As of this writing it's at $16.52.
4 Comments
January 11, 2010
Oh how the mighty have fallen. Well, what does the Pie-man care? . . . he already made millions by selling Bioware/Pandemic to EA for a bloated price.
Will any of this 'non packaged goods' stuff like Social gaming and cellphone gaming ever actually make much money?
January 11, 2010
Wouldn't it be ironic if EA became a takeover target for a change...
January 11, 2010
I think EA in some ways is a takeover target for the big media companies. It wouldn't shock me.
January 12, 2010
I actually don't think EA would be a good acquisition right now, with its entire business model in transition. Still, if the stock price goes low enough the sharks may start to circle... but I think it would be wiser to see how EA comes through the transition to the new market conditions (increasing importance of mobile/social/DLC content, virtual sales and digital distribution) and then grab it once it's demonstrated a successful adaptation to the new realities. It may take the stock a while to reflect this change (assuming it occurs), and that's the best time to grab the company.