Electronic Arts Shares Take a Dive

electronic-artsA disappointing outlook from Electronic Arts Inc. sent shares of the video game publisher sharply lower Monday, a sign that significant cost-cuts and layoffs have not ended the company’s slump. The company, whose games include the popular “Madden” series and “Mass Effect 2,” said Monday it narrowed its net loss in the last quarter even as game sales declined. It blamed the revenue falloff on having fewer titles than it did in the 2008 holiday period. EA also cited weak sales in Europe, which accounts for about a third of its revenue.

The results for the October-December period were not a surprise, because EA had warned in January it would miss forecasts, leading analysts to lower their estimates. The company lost $82 million, 20 cents per share. In the same period a year earlier it lost $641 million, $2 per share. Revenue fell 25 percent to $1.24 billion. Accounting for deferred revenue in games with online components, EA earned 33 cents per share, down from 56 cents per share a year earlier. Analysts were expecting 31 cents, according to Thomson Reuters.

But the company gave a forecast below Wall Street’s expectations for the current quarter, even though it is launching several big-name titles during the period. And Chief Financial Officer Eric Brown said in an interview that “Mass Effect 2,” the science-fiction epic that launched in late January, has sold 2 million copies so far. EA ran its first-ever Super Bowl ad Sunday to promote the upcoming “Dante’s Inferno.”

For the fiscal fourth quarter ending March 31, EA is forecasting a profit of 2 cents to 6 cents per share on an adjusted basis, on revenue of $800 million to $850 million. This is below average analyst estimates of a profit of 13 cents per share on sales of $851 million.

Shares of EA, which is based in Redwood City, Calif., fell $1.65, 9.4 percent, to $15.84 in extended trading after the earnings report.

EA said in November it was cutting its work force by 17 percent, or 1,500 people, as it tries to align its business with transformations in the industry. Game development costs are skyrocketing, forcing publishers to sell blockbuster amounts of games to justify the expenses. In turn, EA is creating fewer games — cutting out projects it is less certain can become big hits.

Third-quarter operating costs declined 33 percent to $696 million.

Besides lackluster sales and a decline in consumer spending, EA is also dealing with the changing ways people consume — and pay for — games. Instead of spending $60 on a shiny new disc, many people are playing free or cheap games online, on their mobile devices and on Facebook. They are spending a few dollars here and there to buy virtual add-ons for the games, or they are signing up for subscription-based online games.

EA has been aggressive about such new revenue streams, and last year bought Playfish Inc., a maker of online social games, for $275 million. While digital content still is a small part of EA’s business, the company’s ability to master online gaming could determine the shape the company is in when game discs go the way of CDs.

Home Theater

Hi-res streaming audio service Qobuz arrives in U.S., threatens Tidal’s monopoly

For several years, Tidal enjoyed a monopoly on hi-res music streaming in the U.S. Now, French company Qobuz is here to offer some competition with a variety of monthly plans starting at $10 a month.
Business

Apple loses battle to use Intel modems in Germany in latest clash with Qualcomm

Apple is following the Federal Trade Commission's lead and has sued Qualcomm for a massive $1 billion in the U.S., $145 million in China, and also in the U.K., claiming the company charged onerous royalties for its patented tech.
Mobile

OnePlus breaks into the top five among U.S. smartphone companies

We've been impressed with the value offered by OnePlus phones for years, but in 2018 the Chinese manufacturer really stepped things up. After impressive sales, OnePlus broke into the top five U.S. smartphone companies in the high-end…
Gaming

These are the must-have games that every Xbox One owner needs

More than four years into its life span, Microsoft's latest console is finally coming into its own. From Cuphead to Halo 5, the best Xbox One games offer something for players of every type.
Gaming

Get the full PS4 Pro experience. Here's every game you can play in 4K HDR

The PlayStation 4 Pro can play any PS4 game, but a select number of titles have been optimized to take advantage of the platform. Here's a list of every new and upcoming game that will benefit from the PS4 Pro.
Gaming

District 9 director made a live-action trailer for Anthem, and it’s pretty cool

District 9 director Neill Blomkamp made a live-action short for Anthem. It's more like a long movie trailer than a short film, but it does offer a couple clues about Anthem's lore and features some dazzling special effects.
Gaming

I'm canceling my backlog for Apex Legends. Be back never

Live service games like Fortnite and Apex Legends are eating up everyone's time, leaving other games out in the cold. While my backlog continues to grow, it seems the gaming industry is struggling to keep up as well.
Gaming

Take to the virtual skies with these free flight simulators

You don't have to spend the entirety of your paycheck to become a virtual ace, at least when it comes to flight simulation. Our list of the best free flight simulators will let you unleash your inner Maverick.
Gaming

Here's how you can play your favorite PC games with a Nintendo Switch controller

Nintendo's Switch controllers, including the Joy-Cons and the aptly titled Pro Controller, use Bluetooth, which makes them compatible with your PC. Here's how to start using them for PC gaming.
Gaming

Wage war on a budget with these fun and free first-person shooters

We all know about Halo and Call of Duty by now, but what about quality titles that won't cost you upward of $60? Check out our picks for the best free first-person shooter games from Paladins to Quake Champions.
Gaming

Get creative and collect 15 coins with our Fortnite overtime challenges guide

The first Fortnite overtime challenges are now available. Use our guide to help you collect the hidden coins in the featured Creative mode islands and get closer to that free season eight battle pass.
Virtual Reality

Getting into VR is spendy. Which headset is truly worth your hard-earned cash?

Virtual reality has finally gone mainstream, but how do you find the best VR headset for you? Check out a few of our favorites, whether you want the best of the best or a budget alternative for your mobile device.
Gaming

Become a champion with our beginner's guide to Apex Legends

Jumping into Apex Legends for the first time? Need help becoming a champion? Our Apex Legends beginner's guide has 15 tips and tricks that will hopefully help your team make it into the champion's circle.
Gaming

Buy a new Switch console and get a $35 eShop gift card at some retailers

Multiple retailers are currently offering the Neon Blue and Red Nintendo Switch console with a free $35 eShop gift card. The system still costs the standard $300 and includes Joy-Con controllers and the dock.