EA Posts Strong Results, EA.com Still Struggles

Net revenues for Q4 were $463 million, down one percent from last year. The decline in sales was attributed to fewer releases during the quarter (12 this year compared to 20 in Q4 last year). The company cited The Sims; The Lord of the Rings, The Two Towers, SimCity 4, Command & Conquer Generals, FIFA 2003 and MVP Baseball 2003 as strong sellers during the quarter. Net income for the quarter was down significantly. EA posted net income of just $9 million (6 cents per share), compared to $47 million last year. A $50 million (tax-adjusted) restructuring charge associated with absorbing EA.com back into the overall company was the reason for the sharp decline in profits. For the year, net revenues were up 44 percent, to $2.5 billion. EA had twenty-two platinum titles (over one million units sold) in fiscal 2003. Two franchises -- The Sims and Harry Potter -- each sold approximately ten million units, and four other franchises sold more than five million units: Medal of Honor, James Bond, FIFA Soccer and Madden NFL Football. Net income for the year was $317 million ($2.17 per share), a whopping 212 percent increase over the prior year. EA executives chalked up the earning growth to higher sales volume, increased gross margin and lower operating costs as a percentage of net revenues. During the quarter, EA.com continued to bleed red ink. Q4 revenues for the unit were down 12.5 percent over last year, and its operating loss jumped from $30 million in Q4 last year to $85 million this year.