Lord V works for EA?!?

Economies around the world are in havoc, let’s not even get started on Iceland, but recession is looming or already affecting many countries. Electronic Arts is susceptible and the latest final quarter results show that while net revenue for the quarter was up to US$894 million, the company lost US$310 million, a big chunk from US$195 million from the same period last year. After the news EA shares plummeted to an almost seven-year low in after-hours trading.

With retail forecasts not looking bright EA is focusing on cost reduction by hammering out the pink-slips to 6 percent of its global workforce. That’s over 500 positions. Reportedly both Electronic Arts Los Angeles and Pandemic were already hit hard. Let's follow the money trail and how the EA brands performed including the mega-hyped Spore...

Revenues were driven from Madden NFL 09 which sold 4.5 million copies. Warhammer: Age of Reckoning sold 1.2 million copies. Spore didn’t meet EA’s mega-hit expectations, selling a 'mere' 2 million copies. Guess the DRM fiasco played a role and maybe there’s a hard lesson or two to be learned when stiffing customers with draconian DRM practices.


Spore
In a recent investor’s conference the EA bigwigs claimed the big losses stemmed from a slowdown in October, EA’s lavish investment strategy (buy-out everything), and also from the delayed release of movie tie-in Harry Potter and the Half Blood Prince. The Warner Bros. movie was originally slated for a late-summer release but was bumped until next year, and that cost EA’s projections a cool US$120 million.


Warhammer Online: Age of Reckoning
In a statement, EA CEO John Riccitiello kept the optimism alive.

"Considering the slow down at retail we've seen in October, we are 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 well-positioned to benefit from these technology drivers due to the strength of our creative studios and our broad collection of game properties."

It looks like Electronic Arts is shoring up in an attempt to maintain share holder confidence. Game publishers aren’t immune. This is only the beginning, EA needs to get their act together and rein in spending; however, financial analysts are very skeptical it will be done.