Video game software publisher Electronic Arts has reported an 18% decline in second quarter revenues. The company’s total sales for the quarter ending September 30, 2007 was $640 million compared with $784 million for the prior year period. EA also posted a net loss of $195 million against a $22 million profit last year.
Gross profit for the quarter was $245 million, a decline of 45% compared to last year. The company attributed part of the loss to change in its accounting policy for sales of online-enabled games, now recognizing the sales on a deferred basis over an estimated service period.
Diluted loss per share was $0.62 compared with the earnings per share of $0.07 reported last year. Although the company reported a decline in revenues, it stated that it has booked $296 million in sale of online products that will be accounted for in future periods, resulting in revenue growth.
After the quarterly net loss, EA plans to cut approximately 350 jobs worldwide. It also plans to close its offices at Chertsey in Surrey, UK, which would result in savings of $25 to $30 million.
For its fiscal year ending March 2008, the company estimates revenues to be between $3.35 to $3.65 billion. Adjusted earnings are expected to be between 85 cents to $1.15 per share, reflecting a decrease of 5 cents due to its proposed acquisition of BioWare Corp. and Pandemic Studios.
EA’s competitor, Activision has shown an increase of 69% in its revenues for second quarter, which ended on September 30, 2007. It reported revenues of $317.7 million compared with $188.2 million last year. Net income for the second fiscal quarter was $0.7 million as compared to a net loss of $24.3 million last year.
Source: ComputerWire daily updates