Electronic Arts Beats

EA expects to release 26 games in the coming quarter, compared with 11 in the fourth quarter last year.

EA's results in the just-completed quarter would have been worse if not for the decline of the dollar vs. other major currencies. That decline helps boost the dollar value of overseas sales. In EA's case, currency fluctuations added about $47 million to its top line, helping it top both its own and analysts' revenue expectations.

Jenson declined to say how much the change in exchange rates affected EA's bottom line.

"We have a series of natural hedges in place to minimize the bottom-line impact," he said, in an interview with TheStreet.com.

Helped by the dollar's decline, the company's international operations posted a revenue gain of 2%, compared with the third quarter of EA's fiscal 2004. Without the currency change, the company's international sales would have declined by 5%.

Still, that wasn't as bad as the company's North American operations. Sales on EA's home turf fell 8% in the quarter, attributable largely to the fewer number of releases, according to Jenson. EA's revenue was also affected by a price war, as it was forced to cut prices on Madden NFL 2005 and its other sports titles to compete with rival games from Take-Two. However, the price cuts had a greater affect on the company's gross margin and bottom line than its revenue, Jenson said.

EA's gross profit margin fell to 64.7% of sales from 65.2% of sales in the third quarter of fiscal 2004. Gross profit margin represents the difference between what a company charges customers for its products or services and its direct costs, including royalties, of producing them.

The company's deals with the NFL and ESPN came in response to the competitive threat from Take-Two. However, Jenson declined to give any financial details on those agreements.

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