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EA Lowers Estimates, Plans Cuts As Sales Underperform

Electronic Arts says holiday sales across North America and Europe have not met expectations, and thus neither will its 2009 financial results -- and the publisher will cut staff and titles as part of compensatory cost reductions.
Electronic Arts says holiday sales across North America and Europe have not met expectations, and thus neither will its 2009 financial results. To compensate, EA says it'll cut titles from its slate for next year, reduce headcount and consolidate facilities, although it didn't further specify those cost reduction plans. "While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations," said EA CEO John Riccitiello, Chief Executive Officer, also citing the "uncertain economic environment" as motive for the planned cost reduction. "While we are cutting costs, we remain committed to investing in great game quality, in new properties and in our direct-to-consumer initiatives," Riccitiello added. "We will be launching several new titles and online games in fiscal 2010." Although Lazard Capital Markets analyst Colin Sebastian recently said he felt EA was positioned to weather the downturn, he also lowered his own estimates for EA. The analyst suggested that Mirror's Edge and Need For Speed were underperforming, and predicted further cost reductions for EA beyond the 600 layoffs the publisher announced at the end of October.

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