EA loses $310 million, announces layoffs
Video game giant Electronic Arts released its second quarter fiscal 2009 results, and announced that as a cost-cutting measure, it will be eliminating 6% of its total workforce.
"Considering the slow down at retail we've seen in October, we are cautious in the short term," said EA's CEO John Riccitiello in a statement. Because of this, the company has cut its holiday forecast, typically the strongest quarter of the year.
The workforce reduction is expected to save EA nearly $50 million per year. The company did not say when or where the layoffs would begin, but it has studios in Las Vegas, Walnut Creek, Redwood Shores, Los Angeles, Seattle, Orlando, London, Tokyo, Vancouver and Melbourne.
In the earnings report, the company's revenue was higher than the same quarter last year by 40%, and 20% higher than the first quarter of fiscal 2009. Operating costs, however, far exceeded profits, and the company actually posted a net loss of $310 million. EA said factors contributing to the loss included: losses on investments, stock-based compensations, and a change in deferred net revenue on both packaged and online-based games.
Analysts placed the Earnings Per Share, which is the portion of profit allocated to each outstanding share of common stock, at -6¢.
EA's stock dropped 13% in after-hours trading to below $25.