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Earnings Preview: Electronic Arts

By the Associated Press

NEW YORK (AP) -- Video game publisher Electronic Arts Inc. reports earnings for its fiscal second quarter, which ended in September, on Monday after the market closes. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The video game industry has had a tough time for much of this year after capping 2008 with record sales. The recession has forced customers to cut back on spending, and the lack of big hit titles relative to last year has made year-over-year comparisons difficult.

Electronic Arts, however, could beat Wall Street's expectations for the quarter, according to some analysts, driven by sales of games such as "The Beatles: Rock Band" and "Madden NFL 10."

BY THE NUMBERS: Analysts, on average, are expecting a profit of 7 cents per share on sales of $1.12 billion, according to a poll by Thomson Reuters.

EA does not give quarterly guidance.

ANALYST TAKE: "Recent industry weakness will likely cause the company to lower its full-year industry growth expectations to negative 'mid single digits,' from 'flat' previously," wrote Wedbush Morgan analyst Michael Pachter in a note to investors. "In addition, we believe the company may take a more proactive role in additional cost cuts and may announce additional restructuring initiatives."

Pachter, who rates EA "Outperform," expects the company to report second-quarter's results "well above" average analyst estimates.

WHAT'S AHEAD: EA's fiscal third quarter, which closes the calendar year, is expected to bring in a big chunk of the company's 2009 profit and revenue, since the video game industry makes a great deal of its money during the holiday shopping season.

STOCK PERFORMANCE: Shares of the Redwood City, Calif.-based company fell 12 percent during the quarter to close at $19.05 at the end of September.



Associated Press text, photo, graphic, audio and/or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. Neither these AP material nor any portion thereof may be stored in a computer except for personal and non-commercial use. AP will not be held liable for any delays, inaccuracies, errors or omissions therefrom or in the transmission or delivery of all or any part thereof or for any damages arising from any of the foregoing.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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