Updated from 11:45 a.m. EST

Shares of video games maker

Electronic Arts

(ERTS)

plummeted Wednesday after the company

cut its forecast

for fiscal 2009.

EA's stock closed down $2.35, or 12.14%, to $17, after investors digested the company's revised outlook. The update, which was released late Tuesday, is EA's second estimate cut in less than two months.

In late October, EA projected earnings for 2009 of $1 to $1.40 a share, which was down from its earlier range of $1.30 to $1.70. The company didn't provide a specific forecast Monday but said in a press release that its revenue and earnings would be below the guidance it gave about 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 are expecting a profit of $1.16 a share for the year.

The Redwood City, Calif.-based firm's forecast certainly paints a bleak picture of consumer confidence entering the crucial holiday period.

The revised estimates are primarily the result of lower-than-expected sales in North America and Europe, according to EA, which competes with

Activision Blizzard

(ATVI) - Get Report

, and

Take-Two

(TTWO) - Get Report

.

"We are disappointed that our holiday slate is not meeting our sales expectations," said John Riccitiello, EA's CEO, in a statement. "Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business."

EA will reduce its product portfolio for fiscal 2010, as well as cutting its headcount and consolidating its facilities, the company said, in its statement.

Citigroup Global Markets

downgraded EA to a "Hold" rating in a note released late Monday. The analyst firm also cut the video game maker's target price from $31 to $21.

"We believe the strategic plan for fiscal year 2010 is sound (investing more in fewer SKUs, cutting expenses) but there are too many uncertainties right now for the stock to work," wrote Brent Thill, a Citigroup analyst.

The analyst explained that EA's stock will remain in "the penalty box" until it can show sustainable positive earnings. "We believe Electronic Arts is entering another period of negative earnings revisions with no positive catalysts on the horizon," he wrote.

Thill nonetheless feels that the company's long-term prospects remain bright, thanks to its strong management team, sound strategy, and the gaming industry's history of cyclical growth.

Shares of rival firms

Activision Blizzard

(ATVI) - Get Report

and

Take-Two

(TTWO) - Get Report

also slipped in Wednesday, probably as a result of EA's bleak forecast. Activision's stock slipped 12 cents, or 1.2% to $9.97, while Take-Two shares were down 34 cents, or 2.8%, to $12.46.