Electronic Arts Beats Q2 Expectations, Closing Losses Despite Sales Declines

Electronic Arts beat expectations during its second fiscal quarter, closing its losses despite an overall decline in sales. Thanks to FIFA 11 on consoles and its digital business on mobile platforms, the company reported a $201 million loss versus $391 million in the same period last year. On an GAPP adjusted basis, EA is posting sales of $884 million -- a 23 percent decline, but still above analyst projections -- and profits of $32 million. That's earnings of 10 cents per share, versus the loss of 10 cents per share predicted by analysts. "We had another strong quarter, beating expectations both top and bottom line," says CEO John Riccitiello as part of the firm's official announcement. The company affirmed its revenue guidance for the fiscal year, and as it did in the prior quarter, it claims to be the number one publisher on numerous platforms in the calendar year to date based on market share. It claims 25 percent of the high-definition console market, a number it says has actually grown two points year over year -- its FIFA 11 was Europe's top title during the second quarter, and the franchise as a whole has topped 100 million units globally. As for Medal of Honor, EA touts the title's "strong start", with 2 million units sold in two weeks of October. FIFA 11 was also a top performer for the publisher, with 8 million units sold in to date. Compared to one year ago, Electronic Arts grew its PlayStation 3 software sales 7 percent, while its Xbox 360 sales grew only 1 percent. But the publisher saw Wii software sales plummet 82 percent year over year. Its sales on mobile platforms, including Nintendo DS and PSP, grew 20 percent, while PC grew 9 percent. EA still has some restructuring to do. In a filing with the SEC, the company said that as part of a new plan, it will spend about $180 million in the remainder of its fiscal year to restructure "key licensing and development agreements to improve the long-term profitability of EA's packaged goods business." The company declined to specify in the filing which of its agreements it hopes to re-negotiate or change, but noted that "total costs will be dependent on the final negotiations with our partners." Overall, Electronic Arts maintains its existing full-year revenue projections of $3.35 billion to $3.6 billion. The company has improved loss expectations from $0.70-$1.00 per share to $0.55-$.85 per share -- and on an adjusted basis, expects earnings of $0.50 to $0.70 per share. [UPDATE: Gamasutra has a separate article discussing EA's earnings call comments following the results, including the cancellation of NBA Elite and the company's continued restructuring.]