Electronic Arts, in announcing its fiscal third-quarter results, lost $641 million on sales of $1.65 billion during the holiday shopping season that ended Dec. 31. Last year, the loss was $33 million on $1.5 billion in sales. The losses stemmed mostly from two one-time charges: a charge of $368 million related to its wireless business and a $244 million charge for a valuation allowance reserve on certain deferred tax assets.
"Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009, a clear disappointment," said John Riccitiello, CEO.
As a part of an overall cost reduction program, EA is reducing its workforce by approximately 11%, or 1,100 people, closing 12 facilities, narrowing its product portfolio and cutting other variable costs. The company expects to incur total restructuring charges, including severance and facility closures, of $65 to $75 million, which will be recorded over the next 12 months.
"Given our recent performance and the current economic environment, we are aligning our cost structure with a lower projection of revenue, resulting in approximately $500 million of operating expense reductions in fiscal 2010 as compared with our previous plans," said Eric Brown, Chief Financial Officer.
Sales were driven by FIFA 09, ROCK BAND 2, NEED FOR SPEED UNDERCOVER, ROCK BAND, LEFT 4 DEAD, DEAD SPACE, MADDEN NFL 09, LITTLEST PET SHOP, NBA LIVE 09 and MIRROR'S EDGE.
