Game publisher's net loss quadruples to $94 mil
Double-digit revenue growth was matched by even higher increases in costs, sending Electronic Arts into the red for its fiscal year ended March 31.
No. 1 third-party vidgame publisher reported 19% revenue growth to $3.7 billion, but swung to a $454 million loss after a $74 million profit last year.
For its fourth quarter, EA’s net revenue grew a boffo 87% to $1.13 billion, driven by a larger than typical winter release slate headed by racing game “Burnout: Paradise” and actioner “Army of Two,” as well as continued strong sales for “Rock Band,” which it distributes for MTV. However, net loss nearly quadrupled to $94 million.
“On balance, we’re very pleased with our revenue growth, but not yet happy with our profit margins,” CEO John Riccitiello said in a statement. He said EA revenue will grow $1 billion in the current fiscal year and operating profits will double.
After years at the top of the industry, EA is now seeing growth lag significantly behind that of competitor Activision, which is poised to leapfrog it for first place after a pending merger with Vivendi Games closes.
EA has its own business deals in the works, however. A hostile buyout offer for Take-Two expires Friday. The “Grand Theft Auto” publisher’s management team has opposed a deal, and it doesn’t appear likely that a majority of Take-Two shareholders will take EA’s $26 per share offer this week. EA execs said there were no new developments as of Tuesday.
EA also has a number of big sequels in the works for this year, as well as several original franchises it is planning to launch. It just debuted “Boom Blox,” the first title created by Steven Spielberg under a three-game deal, to largely positive reviews.
EA stock closed up 30¢ Tuesday at $54.57 before its financials were released, then plunged $1.53 or 2.8% in after-hours trading.