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Electronic Arts Calls It Quits With EA.com Subsidiary

Electronic Arts said today that it plans to roll its online unit, EA.com, back into its core operations.
The company said that the move will eliminate dual-class reporting as of April 1, 2003, the start of its new fiscal year. EA executives said the consolidation is expected to improve efficiency, simplify the staff reporting structure, and better integrate EA's online activities into the company's core console and PC business. EA had long hoped that EA.com would turn the corner and post a profit, but a string of online disappointments prevented that. The company had hoped that the release of The Sims Online would be the magic bullet to achieve profitability. But the game's longer-than-expected development cycle and slower-than-expected sales were a setback to a near-term turnaround. On top of that, another EA.com marquis title, Motor City Online, was cancelled on February 26 due to a declining player base. EA will record a charge of $55-$75 million in fiscal Q4, which ends March 31, as a result of the reorganization. The charge covers restructuring costs, some of which entails the consolidation EA.com operations from the San Francisco Bay Area to the company's new Los Angeles studio. EA shares closed up 32 cents (.61%), to $52.42.

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