Shares tumble on weaker than expected results
Electronic Arts continued to grow in its position as the nation’s top videogame publisher, posting double-digit revenue and earnings growth in the fourth quarter thanks to a strong holiday season. Lower-than-expected guidance for the current quarter, however, sent the company’s stock down in after-hours trading.
Competitor Atari also saw its stock tumble after it announced it won’t meet its fourth-quarter guidance and delayed the launch of a highly anticipated game.
Driven by strong sales of Need for Speed Underground, The Lord of the Rings: The Return of the King and Madden NFL Football 2004, EA saw its revenue reach $1.475 billion in the third quarter on its fiscal calendar, up 20% from the same quarter a year ago. Net income was $392 million, up 57%.
Company had 11 titles sell 1 million-plus units each in the quarter, including Need for Speed, the top-selling game of the holiday season, and Madden, the top-selling game of 2003.
EA saw its strongest growth in Europe, where net revenue rose 40% to $658 million. North American net revenue was up a more modest 8% at $753 million, while in Japan it fell 29% to just $21 million.
For the current quarter, the fourth on its calendar, EA is expecting revenue between $550 million and $570 million, up 19%-23% from last year, and diluted earnings per share of 17¢-20¢, equal with last year’s 20¢, excluding one-time charges.
Wall Street analysts had expected earnings of around 25¢ per share on similar revenue.
EA wasn’t the only vidgame publisher to disappoint investors Tuesday. Atari revealed the ship date for its heavily promoted Driv3r, which features the voices of thesps such as Michelle Rodriguez and Michael Madsen, is being pushed back from late March to June 1.
Atari also warned its fourth-quarter performance would be worse than expected, with net revenue of $190 million and net income between $20.5 million and $22.5 million. Atari had previously provided guidance of net income between $28 million and $36 million on net revenue between $215 million and $235 million.
Both stocks fell in after-hours trading after the news was announced, with Atari down more than 20% at $3.40 and EA down nearly 5% at $46.20.