Electronic Arts Misses the Mark

Updated from 8:20 a.m. EDT

Electronic Arts (ERTS) posted a disappointing second-quarter financial report after the bell Tuesday, with earnings below analysts' estimates and a profit forecast that fell shy of Wall Street's expectations.

In early trading Wednesday, shares of EA were recently down $2.82, or 6.1%, to $43.84.

In its fiscal second quarter, the video-game publisher earned $97.3 million, or 31 cents a share, on $715.7 million in sales. That was up from last year, when the company earned $76.6 million, or 25 cents a share, on sales of $530 million.

Excluding charges, the company would have earned $97.7 million, or 31 cents a share. While that result met the company's guidance, it wasn't as high as the Street had hoped.

On average, analysts expected EA to post a second-quarter profit of 36 cents a share -- 35 cents a share, excluding gains and charges -- on $714.1 million in sales, according to Thomson First Call. The company itself predicted that it would earn 28 cents to 34 cents a share in the quarter, on sales ranging from $680 million to $740 million.

Despite disappointing the Street, EA officials touted the company's success in the quarter. The company's Madden NFL 2005 title has posted double-digit growth in units and revenue over last year despite competition from ESPN NFL 2K5, which is co-published by Sega and Take-Two Interactive (TTWO), said company CFO Warren Jenson.

Meanwhile, the company's The Sims 2 title has sold more than 3 million copies, making it the strongest launch of a PC game in the company's history, he said.

"We're pretty proud of our performance," Jenson said.

For the third quarter, EA expects to post profits ranging from $1.11 a share to $1.21 a share -- $1.16 to $1.26 a share excluding charges -- on sales of between $1.4 billion and $1.475 billion.