EA Shares Plunge on Profit Warning

Updated from 11:45 a.m. EST

Shares of video games maker Electronic Arts(ERTS Quote) plummeted Wednesday after the company cut its forecast for fiscal 2009.

EA's stock closed down $2.35, or 12.14%, to $17, after investors digested the company's revised outlook. The update, which was released late Tuesday, is EA's second estimate cut in less than two months.

In late October, EA projected earnings for 2009 of $1 to $1.40 a share, which was down from its earlier range of $1.30 to $1.70. The company didn't provide a specific forecast Monday but said in a press release that its revenue and earnings would be below the guidance it gave about five weeks ago.

EA said it doesn't expect to provide updated estimates for the fiscal year before reporting its third-quarter results in February. On average, analysts are expecting a profit of $1.16 a share for the year.

The Redwood City, Calif.-based firm's forecast certainly paints a bleak picture of consumer confidence entering the crucial holiday period.

The revised estimates are primarily the result of lower-than-expected sales in North America and Europe, according to EA, which competes with Activision Blizzard(ATVI Quote), and Take-Two(TTWO Quote).

"We are disappointed that our holiday slate is not meeting our sales expectations," said John Riccitiello, EA's CEO, in a statement. "Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business."

EA will reduce its product portfolio for fiscal 2010, as well as cutting its headcount and consolidating its facilities, the company said, in its statement.