EA posts Q2 loss, plans massive layoffs

Imagine how it must feel to hear that EA has acquired Playfish, a social game development company, for a possible total of $400 million USD and then in the same breath that you are losing job. That’s what some EA employees might be hearing (or have heard) today as EA reveals its abysmal second quarter results and a series of planned layoffs.

Electronic Arts said Monday that its loss widened in the second quarter and that it plans to lay off around 1500 employees, or about 17 percent of its global workforce. This would happen before April 2010, the velocity of those layoffs is an unknown at this time; for all we know they have already begun..

In the second quarter EA posted a net loss of $391 million, or $1.21 a share - a 26 percent increase over the same period a year ago. Net sales saw a 12 percent decline to $788 million in the second quarter as well. Sales, including deferred revenue from online games, did grow 2 percent to $1.15 billion during the quarter, but obviously it was not enough to pull Q2 into the black.

It must hurt those employees to hear that This morning EA announced that it had committed to purchase the outstanding assets of Playfish, one of the largest social game development studios on Facebook (and other platforms), for a total of $400 million USD (see this news story for a break-down). EA said that these layoffs, 1300 of which are part of a restructuring plan that was already in place, will be completed by March 31, 2010. According to the company, this plan will result in annual cost savings of at least $100 million and restructuring charges of $130 to $150 million.

Looking to the next quarter, EA predicts GAAP net revenue to be between $3.6 and $3.9 billion; Non-GAAP net revenue is expected to be $4.2 to $4.4 billion; GAAP diluted loss per share is expected to be between $1.20 and $2.05; Non-GAAP diluted earnings per share is expected to be between $0.70 and $1.00; and return to profitability in Q3 and Q4.

EA reports smaller than expected loss

Electronic Arts today released financial results for the first quarter that ended on June 30 of this year. While the news is grim, there is somewhat of a silver lining for one of the world’s largest game publishers. First and foremost, changes in accounting rules for deferred revenue impacted sales for the quarter coupled with a seasonal slump in the industry during the three month period.

EA reported a loss of $234 million, or 72 cents per share, before adjustments in the April to June period, compared with a loss of $95 million, or 30 cents per share, in the same quarter a year earlier. During the quarter, the company recorded a net revenue deferral of $172 million related to online-enabled packaged goods games and digital content as compared with a net benefit of $195 million in the first quarter of the prior year.

Revenue for the quarter also fell 20 percent to $644 million from $804 million a year ago. Excluding restructuring charges and various adjustments, EA lost 2 cents per share in the latest quarter. The good news is that EA managed to beat “the street,” who expected the company to post a loss of around 13 cents a share.

Some other good news: adjusted revenue for the first quarter clocked in at $816 million, up an impressive 34 percent from last year - way above the $729.5 million range that analysts had predicted.

Highlights for the first quarter included doubling sales of Wii games thanks to EA Sports Active (which sold over 1.8 million copies), 3.7 million copies of The Sims 3, $50 million of non-GAAP revenue in the quarter from EA Mobile (up 14 percent), and EA Digital non-GAAP revenue of $124 million (up 38 percent year-over-year).

Looking ahead the company expects better days in the second quarter. Madden NFL 10, which will be available on August 14 for various platforms, should give EA a large boost in sales numbers. EA also plans to sell virtual items in The Sims 3, as well as subscription-based online games - though that particular space, save Ultima Online, hasn’t been a successful sector for EA over the years.

EA expects GAAP net revenue to be between $3.7 and $3.85 billion; non-GAAP net revenue of approximately $4.3 billion; a GAAP diluted loss per share between $0.85 and $1.35; and non-GAAP diluted earnings per share of approximately $1.00.

Ubisoft sales decline in fiscal Q1 2009-2010

Today Ubisoft reported sales for the first fiscal quarter that ended on June 30, 2009. Sales for the 2009-10 fiscal first quarter came to €83 million ($113.71), down 50.6 percent, or 50.8 percent at constant exchange rates, compared with the €169 ($231.53) million recorded for the same period of 2008-09. Those numbers were 12.6 percent below the guidance (approximately €95 million or $130.15 million) issued when Ubisoft released its sales figures for fourth-quarter 2008-09.

According to Ubisoft, this was due to slowdown in sales of Nintendo DS games in Europe and the United States (see this news story) that impacted new and old game sales. Lower back-catalog sales of titles for PS3 and Xbox 360 than in the first quarter of 2008-09 also contributed to these numbers - as did cited bad market conditions during the quarter.

On a positive note, Call of Juarez and Anno launched during the quarter and were in line with expectations, with Anno receiving solid ratings for the PC, Wii and Nintendo DS. The quarter also saw significant market share gains on the Wii since the start of the calendar year (7.2 percent market share in Europe versus 4.6 percent one year earlier, and 4.5 percent in the United States compared with 2.7 percent).

Looking to the fiscal second quarter, Ubisoft expects to see some good results on games being released during that time (see this release schedule) including Teenage Mutant Ninja Turtles: Smash-Up for Wii and PlayStation 2; a game based on the animated film Cloudy with a Chance of Meatballs for Wii, Nintendo DS, Xbox360, PS3, PSP and PC; Academy of Champions for Wii in the UK, the Nordic countries and Australia; and new casual titles for Nintendo DS and Wii.

Sales for the second quarter of 2009-10 are expected to be at around €80 million ($109.60), a 54 percent decrease on the second quarter of 2008-09. This guidance is lower than the €130 million ($178.10) announced when Ubisoft released its sales figures for fourth-quarter 2008-09, for the same reasons as mentioned above. A few delays (read about that here) can’t be helping guidance for Q2 09-10 at all.

Note: numbers have been converted from European Euros to U.S. Dollars at an exchange rate of 1.37 US Dollars to 1 Euro.

Majesco Posts Huge Jump in Profits

Okay Majesco. Apparently someone forgot to send you the memo, but the world economy has gone to pot and no one is supposed to be actually making any money. How could you buck the trend and not only turn a profit last quarter, but boast a 75.8 percent jump in revenue?

All kidding aside, it was a great day for Majesco investors yesterday. The same day the market saw Take-Two post $50 million in losses, Majesco filed its numbers for the first 2009 quarter, laying claim to a 75.8 percent increase in revenue over the same time last year,

Read the rest of this entry »

Sega Records YTD Losses of $119M

Just when you thought it was safe to read some financial news in video games, Sega Sammy Holdings took this morning to release its financial statement for the nine month period ending on December of ‘08. In the statement, the company revealed that it was hit with a net loss of 10.8 billion yen (approximately $119M USD). While the news looks bad, it’s actually an improvement of roughly 33 percent when compared to the 15.7 billion yen (about $173M USD) loss seen in the same period in the year before. Sega’s overall sales for the period were down 15.4 percent, with its Consumer Business division getting hit with an operating loss of 5.6 billion yen (USD $61.4 million) on net sales of 96.2 billion yen (USD $1.06 billion).

Read the rest of this entry »

Capcom Hit with Major YTD Losses

In case you haven’t noticed from all the headlines lately, it’s that time of the year when companies have to report on their progress for the third financial quarter of the year. The most recent game company to step up to the firing line was Capcom, who released details of its year-to-date financials to investors late yesterday. The results were pretty rough, with the company reporting an overall loss of net income totaling a whopping 95 percent. However, things aren’t as bad as they seem, and the company expects to change things by the end of the financial year.

Read the rest of this entry »

EA Posts Q3 Losses, Revises Game Releases

Lately, with all of the economic news I’ve been writing, I’m feeling more and more like the Crispy Gamer financial analyst. This time around, it’s Electronic Arts’ financials taking the spotlight. The publisher released its third quarter numbers for the 2009 financial year today. With all the news of layoffs at the company, and throughout the rest of the industry for that matter, I was more than a little curious to see just how EA was faring in these rough times. The answers were, well, a little mixed.

Read the rest of this entry »