Electronic Arts Shorts Out

Updated from July 26

Electronic Arts(ERTS) reported first-quarter results Tuesday that beat Wall Street estimates. But the video-game software maker lowered its outlook for the full fiscal year to reflect a delay in the release of The Godfather game.

EA shares were recently off 0.3% to $58.82.

As widely expected, the Redwood City, Calif.-based video-game software maker lowered its guidance for fiscal year 2006, which ends in March. The company said it expects GAAP and non-GAAP earnings of $1.45 to $1.60 a share on sales of $3.3 billion to $3.4 billion.

Previously, the company had forecast earnings of $1.55 to $1.70 a share on sales ranging from $3.4 billion to $3.5 billion, representing a 9% to 12% revenue increase. Wall Street analysts most recently were expecting earnings of $1.63 a share on $3.4 billion in revenue for fiscal 2006.

On a postclose conference call, CFO Warren Jenson said the delay in launching The Godfather, combined with the impact of changing exchange rates prompted the lower guidance. He declined to detail the specific impact of each on the top and bottom lines.

"We were disappointed by the delay in launching Godfather. Nevertheless, it was the right thing for the long-term strength of this key franchise," he said.

Blaming production issues, the company warned earlier this month that it won't ship The Godfather until the first calendar quarter of next year, which is the company's fourth quarter. The delay means the game will miss out on the crucial holiday sales season and have one less quarter of sales results in this fiscal year.

Also earlier this month, EA renewed its licensing deal with John Madden in a deal that keeps his face on its market-leading National Football League game while likely adding some cost to the title for EA. The company already had warned that exclusive licensing deals signed with the NFL and Disney's (DIS) ESPN sports media division will kick in this year and drive up some of its costs in the near term.