Electronic Arts slashes 2013 outlook as industry struggles

Wed Jan 30, 2013 8:32pm EST
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By Malathi Nayak

SAN FRANCISCO (Reuters) - Electronic Arts Inc slashed its fiscal 2013 earnings forecast after a weaker-than-expected holiday quarter marked by disappointing sales of its "Medal of Honor" title, as the industry struggles with flagging demand.

The games maker forecast non-GAAP revenue for the year to end-March of $3.8 billion to $3.9 billion and earnings of $0.86 to $1.00 per share from $1.00 to $1.15 per share previously, down about 13 percent at the mid-point.

Chief Financial Officer Blake Jorgensen said the earnings forecast had been adjusted downward, to take into account uncertainties in the seasonally weaker March quarter.

"The economy hasn't gotten any stronger," he told Reuters in an interview. "It's a little early for me to know how strong the market's going to be, so based on that we widened our range for revenue for the fourth quarter and brought our guidance down slightly just to make sure we're prudent."

Wedbush Securities analyst Michael Pachter said Electronic Arts was being "overly conservative" with its guidance after its big holiday release "Medal of Honor: Warfighter" underperformed.

"They were a little shell-shocked by how bad holiday demand was, and I think at the low end they're probably assuming demand is down 20 percent or so," Pachter said.

Electronic Arts is betting on several high-profile releases later in the quarter to help rev up sales. The latest installment of the popular "SimCity" will launch in March, and action-horror title "Dead Space 3" is due next week -- two of just four major games that Electronic Arts has lined up in the fourth quarter.

New hardware could also potentially boost sales in the troubled video game sector, according to analysts. Consumers are holding back from buying hardware and software as they wait for rumored next-generation versions of Sony Corp's PlayStation and Microsoft Corp's Xbox, expected later this year.   Continued...