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Electronic Arts Tops Estimates

But the company swings to a loss.

Updated from 5:05 p.m. EDT

SAN FRANCISCO -- Video-game publisher

Electronic Arts


beat Wall Street's earnings estimates for the second quarter and guided in line with analyst expectations for the holiday season.

The company swung to a loss of $195 million for the quarter, compared to net income of $22 million a year earlier, because of an accounting change in the way it recognizes revenue from its online packaged games business

Excluding charges, the company earned 27 cents a share. Analysts polled by Thomson Financial were expecting earnings of 20 cents a share.

Revenue was down 18% to $640 million from $784 million a year ago, driven by a $296 million increase in deferred revenue from the previous quarter. Revenue, excluding the deferral, was $936 million, up 19% or $152 million from a year ago. Analysts were expecting revenue of $896.16 billion.

Beginning fiscal 2008, EA said it will no longer charge for certain online packaged games. As a result, in the second quarter the company said it has seen a $296 million net increase from the previous quarter in its deferred net revenue, which will be recognized in future periods.

Shares of EA were up $2.57, or 4.3%, to $61.31 in recent after-hours trading.

For the third quarter, EA expects to report revenue in the range of $1.32 billion and $1.57 billion. Excluding charges, the company guided earnings in the range of 75 cents to 95 cents a share.

Net revenue, excluding the impact of the change in deferred revenue, is expected to be between $1.63 billion and $1.8 billion. Analysts were expecting net revenue of $1.61 billion and earnings of 94 cents a share.

For the fiscal year, EA expects net revenue, excluding the deferred revenue impact, of $3.8 billion to $4 billion. Analysts were expecting revenue of $3.76 billion.

Excluding charges, the company expects earnings between 85 cents and $1.15 a share. Analysts were expecting earnings of 94 cents a share.


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