Electronic Arts beats estimates for 4Q on PS3 game sales
SANFRANCISCO - Electronic Arts Inc., benefiting from brisk holiday sales of video games used on Sony Corp.'s new Playstation 3, exceeded Wall Street's earnings expectations Thursday despite fiscal third-quarter sales that dropped 38 percent.
Net income for the three months ended Dec. 31 was $160 million, or 50 cents per share, compared with $259 million, or 83 cents per share, during the same period last year.
Revenue for the quarter that ended Dec. 31 rose less than 1 percent to $1.28 billion from $1.27 billion a year ago.
Excluding special expenses, such as a $28 million charge resulting from a major accounting change in stock-based compensation, the world's largest video game publisher earned $201 million, or 63 cents per share.
On that basis, which does not comply with generally accepted accounting principles, analysts surveyed by Thomson Financial expected Redwood City-based EA to earn $184 million, or 57 cents per share, on sales of $1.27 billion.
Chief Financial Officer Warren Jenson, who raised earnings estimates for fiscal 2007, said the company was profiting from the growing niche of "interactive entertainment" - subscriptions to online gaming sites, in-game advertising and micro-transactions from online players. The company will take in roughly $115 million in 2007 in interactive revenue sources, up from about $75 million last year.
"We're starting to see the beginnings of the digital area in interactive entertainment," Jenson said Thursday in an interview.
Jenson said revenue for the current quarter would fall in the range of $550 million to $600 million. He said earnings, excluding special expenses, is expected to be 3 cents per share.
The company expects net revenue for fiscal 2007 to total $3.025 billion to $3.075 billion, better than the bottom-line estimate of $2.95 billion that the company had previously forecast.
The company expects fiscal 2007 earnings, excluding special expenses, to be 70 cents to 74 cents per share, up from previous estimates of 55 cents to 70 cents per share.
EA's most popular titles in the last quarter were "Need for Speed Carbon," "FIFA 07," "The Sims 2 Pets" and "Madden NFL 07," with each game selling more than 3 million copies.
EA sold $41 million in titles for the PlayStation 3, a highly anticipated gaming console that debuted in November. It sold $29 million in titles for Nintendo Co.'s Wii, and Chairman and CEO Larry Probst emphasized Thursday that EA would increase availability of Wii-friendly games.
EA also sold $400 million in titles for the older PlayStation 2 and $172 million in titles for Microsoft Corp.'s Xbox 360 last quarter.
Shares of EA ended the regular session Thursday on the Nasdaq Stock Market at $50.54, up 54 cents, or 1 percent. After the report was released, the stock gained another $1.96 in extended trading.
