Income dropped 38% in holiday quarter
Electronic Arts saw its net income drop 38% during the crucial holiday quarter on virtually flat sales amidst a very small rollout for Sony’s PlayStation 3.
However, company beat Wall Street’s muted expectations for the quarter, leading to a 6% rise in its stock price in after-hours trading.
World’s No. 1 vidgame publisher placed a bigger bet on the PS3 than on Nintendo’s Wii last quarter and didn’t get much benefit.EA made $41 million in revenue from PS3 games and $29 million from the Wii, even though it sold four PS3 games at $60 each and just two Wii games, priced at $50.
Sony’s pricier, higher-powered machine shipped only 1 million units by the end of last year compared to 2 million Wii’s.
However, CEO Larry Probst said EA plans to “significantly increase our support” for Wii and Nintendo’s handheld DS, which is handily outselling Sony’s competing PSP.
Since many gamers had a tough time getting their hands on a PS3 or Wii, but may have saved their money rather than buy games for older systems, software sales rose only slightly overall. NPD data showed that in North America, games sales rose 6% last year.
Trend was reflected at EA, where revenue was up just 1% to $1.28 billion last quarter.
However, EA did maintain its leadership position in most areas, coming out the No. 1 publisher for the Xbox 360 and Xbox, PlayStation 2 and 3, PC and PSP in North America and Europe.
Net income was $160 million. Comparison with 2005 was hurt slightly by the inclusion this year of $28 million of stock-based compensation in expenses.
Since so many games are bought as holiday gifts, EA counts on the fourth quarter — the third on its fiscal calendar — to account for more than a third of its yearly revenue.
For the fiscal year ending March, guidance calls for revenue of just over $3 billion. That would be up just slightly from last year’s $2.95 billion.
However, now that all the next-gen consoles are in the market and EA has a full slate of development in place for them, company is expecting a better perf going forward.
“The past several years have been about investment. The coming years are about growth and reward,” said chief financial officer Warren Jenson.
Before earnings were announced, EA stock closed up 1% at $50.54 on Thursday.