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EA Lowers Fiscal Year Expectations After Weak Quarter

Major publisher Electronic Arts has announced reduced outlook for the year ending March 2010, thanks to a weak European market and low holiday quarter margins, with its shares dropping by almost 10% as a result.
A weak European market and a holiday quarter that didn't meet expectations have led major game publisher Electronic Arts (The Sims, Need For Speed) to lower its financial forecast for the fiscal year ending March 31. The company reduced its yearly guidance from $3.6-$3.9 billion down to $3.6 billion-$3.675 billion, and expects to lose $1.94 to $2.24 per share, as opposed to $1.20 to $2.05 per share. And while the company has not yet officially released financial data for its third quarter, which ended December 31, it expects those figures to come in between $1.227 billion and $1.247 billion. Analysts had previously pegged that figure to be considerably higher at $1.42 billion. As usual, EA also provided non-GAAP expected revenue figures for the fiscal year, reflecting earnings that don't incorporate various deferred revenue, stock-based compensation, restructuring, and other expenses. The publisher expects to see fiscal year revenues of $4.125 billion to $4.2 billion on that basis, down slightly from the previously-estimated $4.2 billion to $4.4 billion. EA posted a $391 million GAAP loss for its second fiscal quarter, and plans to lay off 1,500 workers by April 2010. These staff changes and planned facility consolidations or closures are expected to cost the company between $130 and $150 million, but should save the company $100 million a year going forward. CEO John Riccitiello recently affirmed to Gamasutra that the company is on a strong track, as it's made deep cuts to its SKU slate in favor of higher quality. Riccitiello says it takes time for higher quality to reflect in sales numbers. Following the announcement, Electronic Arts shares took a dive in after-market trading, down almost 10% to $16.69, and approaching the firm's 52-week share price low of just over $14.

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