May 15, 2008 / 12:30 AM / 11 years ago

Electronic Arts top expectations, eyes share gains

SAN FRANCISCO (Reuters) - Top video game publisher Electronic Arts Inc on Tuesday posted a quarterly profit that beat Wall Street expectations and said it expects to gain market share on the strength of upcoming titles like “Spore” and “The Sims 3.”

The EA Sports studio which is used in the production of many video games released by the company is seen here in Burnaby, British Columbia May 7, 2008. REUTERS/Andy Clark

“We have a very strong title slate,” Chief Financial Officer Eric Brown told Reuters. “We’re forecasting growth for the overall segment of 15 to 20 percent while we expect to grow 25 to 30 percent, so we are looking to take share in (fiscal)


EA, which is trying to buy Take-Two Interactive Software Inc for $2 billion, also gave its first forecasts for fiscal 2009, saying it expected a net profit of 25 cents to 52 cents a share on net revenue of $4.9 billion to $5.15 billion.

For its fiscal fourth quarter, EA showed a profit excluding special items of 9 cents per share on revenue of $919 million, up 50 percent from a year earlier. Including deferred revenue for some online games, EA’s top line grew 84 percent to $1.13 billion.

Brown said the revenue growth, driven by the “Rock Band” music game, “Army of Two” military shooting title, and “Burnout Paradise” driving game, meant EA finished the quarter with about 21 percent of the North American video game market, up 5 percentage points from a year earlier.

EA’s main competitors, apart from “Grand Theft Auto 4” publisher Take-Two, are “Guitar Hero” publisher Activision Inc and France’s Ubisoft, which makes Tom Clancy military-themed games.

Although operating margin was flat in fiscal 2008 at about 8 percent, EA aimed to grow that to between 12 percent and 14 percent in fiscal 2009, Brown said.

“We’re expecting to get some efficiencies in marketing and SG&A (sales, general and administrative), and we’ll keep R&D about the same,” Brown said.

The company had been expected to show a profit of 1 cent per share on revenue of $840 million, according to the average expectations of Wall Street analysts on Reuters Estimates.

Shares in EA rose as much as 2.6 percent to $56 in extended trading after the results, but later trimmed those gains to trade at about $54.80.

Electronic Arts said its net loss for its fourth fiscal quarter was $94 million, or 30 cents per share, compared with a loss of $25 million, or 8 cents per share, a year earlier.

As for Take-Two, it has rejected EA’s $25.74-per-share tender offer as too low.

Reporting by Scott Hillis; Editing by Braden Reddall

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