Electronic Arts Warns on Profit

Electronic Arts (ERTS) again cut its forecast for fiscal 2009, saying Tuesday that lower-than-expected sales in North America and Europe have dampened its outlook further.

In October, the video-games maker projected earnings for 2009 of $1 to $1.40 a share, which was down from its earlier range of $1.30 to $1.70. EA didn't provide a specific forecast, but said in a press release that its revenue and earnings would be below the guidance it gave around 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 surveyed by Thomson Reuters are expecting a profit of $1.16 for the year.

"While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations," said John Riccitiello, EA's chief executive, in a press release. "Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business."

The company said it would continue to "pursue cost saving initiatives including a reduction of its product portfolio for fiscal year 2010 with additional associated headcount reductions and facility consolidations."

Shares of EA fell 11.5% to $19.35 in regular trading, and in the after-hours market the stock lost another 8%. Elsewhere in the sector, Activision Blizzard (ATVI) was down nearly 3%, while Take-Two (TTWO) was unchanged.

EA is the latest technology company, many of which were chip names, to warn this week. On Monday, Texas Instruments (TXN), National Semiconductor (NSM) and Altera (ALTR) offered disappointing guidance.

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