(02-03) 19:51 PST -- Electronic Arts announced more job cuts and delays to game releases Tuesday after a larger-than-expected loss from the holiday quarter.
The Redwood City gamemaker said it will close 12 facilities and slash 1,100 jobs, about 11 percent of its workforce.
The reductions update the cost-restructuring plans the company announced in December, when it expected to cut 1,000 jobs and close nine facilities.
In its third quarter, which included the all-important holiday season, EA lost $641 million ($2 per share) for the three-month period ending Dec. 31.
After restructuring charges and other items, EA said it would have earned $179 million (56 cents) well below analysts' estimates of 88 cents per share. This was after EA had warned investors of lower profit and revenue in December because of sagging sales.
EA posted revenue of $1.65 billion, up from $1.5 billion for the same period in 2007. The company was hurt by charges for goodwill impairment and deferred tax assets.
EA lowered its outlook for the current fiscal year, which ends March 31, based on weaker-than-expected sales.
Net revenue is now expected to fall between $4.2 billion and $4.25 billion with a diluted loss per share expected between $3.29 and $3.56. In October, EA had forecast revenue of $4.9 billion to $5.15 billion for fiscal 2009.
"Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009, a clear disappointment," EA chief executive John Riccitiello said in a statement.
In addition to layoffs and studio closures, EA is delaying the release of three games - The Sims 3, Godfather 2 and Dragon Age - until fiscal 2010. The cost of EA's entire restructuring will be $65 million to $75 million over the next 12 months.
EA did provide some hope for fiscal 2010, with projected revenue coming in at between $4.2 billion and $4.35 billion. Todd Greenwald, an analyst with Signal Hill Group, said that was a nice surprise and above his projections for the company. But he said EA is still struggling to put out a more appealing and focused assortment of games.
"A lot of the franchises have gotten stale and tired, like some of the sports titles and Need for Speed," Greenwald said. Sales of some titles were down this year, he said.
"They tried to introduce new properties, but it was a tough time and they didn't sell up to expectations."
More closings is sad, and it appears we will have to wait until Fiscal Q1 2009 for Godfather (April to June 2009). I haven't played the first one so this news didn't affect me too much. Though some the Sims geeks might be having a heart attack at this one.
