Profit Slumps at Electronic Arts

Updated from 5:01 p.m. EST

The transition to a new generation of video-game technology is proving tough for industry leader Electronic Arts (ERTS).

The video-game software publisher on Thursday reported that earnings slumped in the holiday quarter, coming in below analysts' already lowered expectations.

Meanwhile, the company predicted more rocky times ahead, giving a current-quarter forecast significantly below the Street's estimates.

The disappointing outlook marks the sixth straight time the company has offered a worse-than-expected forecast in its quarterly report.

Despite the bad news, investors seemed willing to cut the company some slack. In recent after-hours exchanges, EA's shares were up $1.02, or about 2%, to $54.60.

In its fiscal third quarter, which ended Dec. 31, EA earned $259 million, or 83 cents, a share. That was down from the year-earlier period, when the company posted a profit of $375 million, or $1.18 a share.

Sales fell 11% year over year to $1.27 billion.

Excluding certain amortization and restructuring charges, EA would have earned $268 million, or 86 cents a share, in the just-completed period.

On this basis, analysts polled by Thomson First Call were expecting the company to earn 90 cents a share on $1.26 billion in sales.

But the Street's estimates were down significantly from where they were in mid-December, when the company warned that its results would be "well below" its earlier target of $1.15 to $1.25 a share in earnings on sales ranging from $1.48 billion to $1.58 billion.

Looking forward, EA expects to lose 15 cents to 23 cents a share in the current quarter on sales ranging from $550 million to $600 million.

Excluding costs related to its planned acquisition of mobile-phone game publisher Jamdat (JMDT), restructuring charges and a tax on foreign earnings, the company expects to earn 6 cents to 14 cents a share.