EA Q4 sales jump on Rock Band, Burnout

Games publisher forecasts 37% growth for 2009

By Danny King -- Video Business, 5/13/2008

MAY 13 | Electronic Arts' fiscal 2007 fourth-quarter revenue surged on the popularity of its Rock Band and Burnout Paradise game titles, and the company forecasted accelerated growth for fiscal 2009. Its fourth-quarter loss widened on a one-time investment loss.

The largest U.S. games publisher said revenue for the quarter ended March 31 jumped 84% to $1.13 billion, the company said today. Its net loss widened to $94 million, or 30¢ a share, from $25 million, or 8¢, a year earlier. Excluding one-time items such as a $106 million investment loss, EA’s earnings rose to $30 million from $19 million a year earlier.

EA, which accounted for about a fifth of North America’s videogame market share, had 27 titles that sold more than 1 million units for the fiscal year, up from 24 titles a year earlier, helping the company's fiscal 2008 sales rise 19%. EA's fourth-quarter sales beat the $834.8 million average revenue estimate by analysts in a Thomson Financial survey.

“EA’s lineup of new, owned intellectual properties positions the company to dramatically gain share of a market that we expect to grow by 19% in 2008,” Wedbush Morgan analyst Michael Pachter said in a note to clients yesterday.

EA's Rock Band and Army of Two were among the 10 best-selling game titles in the U.S. during the first quarter, according to NPD Group.

For fiscal 2009, EA forecasts sales of $4.9 billion to $5.15 billion, whose midpoint is 37% more than the most recent year’s revenue. CEO John Riccitiello said in a conference call today that the projection represented “the most aggressive growth in EA history.”

In addition to its new titles, EA tried to capitalize on a growing U.S. games market, which surged 28% to $9.5 billion last year, according to NPD Group, by making a February bid for Take-Two Interactive. The offer valued its smaller competitor at about $2 billion, or about an eighth of EA’s market value. Shareholders at Take-Two, whose Grand Theft Auto IV set one-day and first-week all-time records for videogames after its April 29 release, have since rejected the bid.

“Our valuation took fully into the account of the success of GTA,” said Riccitiello. “It’s a spectacular game.”

He added that the offer stands and that EA has responded to Federal Communications Commission questions about whether a merger would be anti-competitive

EA faces being overtaken as the world’s largest games publisher as Vivendi in December agreed to merge its games unit with Activision in a $9.85 billion transaction. The new company, to be called Activision Blizzard, would have revenue approaching $4 billion range. Vivendi announces earnings tomorrow.