EA Posts $454M Loss Amidst Banner Year

[safan80]

http://www.dailytech.com/EA+Posts+45...ticle11777.htm

27 EA games last year went platinum, 15 went double platinum

In one of the biggest years ever in gaming, Electronic Arts posted a $454 million net loss in its fiscal 2008. That may come as a bit of a surprise, given that 27 of EA’s titles this year sold more than 1 million units, and 15 that sold more than 2 million.

In fiscal 2007, EA had 24 titles that surpassed the million mark, but managed a net income of $76 million. That’s not to say that EA just finished a bad year – far from it, as the games maker reported a net revenue of $3.665 billion in fiscal year ended March 31, 2008, up 19 percent as compared with $3.091 billion for the prior year.

In fact, the past fourth quarter was a record setting one, with sales up 84 percent to an impressive $1.13 billion. The record period was driven by PlayStation 3 and Xbox 360 cross-platform titles Burnout Paradise, Army of Two and Rock Band. Despite that, net loss for the quarter was $94 million as compared with a net loss of $25 million for the prior year.

The cause for the loss can be partly attributed to the acquisition of game development studios BioWare Corp. and Pandemic Studios in a deal worth $860 million. Though not exactly of the same acquisition type, EA managed to lure former top Microsoft executive Peter Moore away from the Xbox business to helm EA Sports.

It’s clear that EA’s not finished in growing its family just yet. The massive game publisher recently borrowed $1 billion from Morgan Stanley and other lenders to help finance a possible acquisition of Take-Two Interactive.

EA also had other victories during the year, including it claiming itself the number one publisher across all platforms in North America with 19 percent share and in Europe with 20 percent share. The Sims franchise surpassed the 100 million copies sold milestone, with plenty more on the way. EA also secured exclusive rights from Hasbro to create games based upon intellectual properties including Monopoly, Scrabble, Yahtzee, Nerf, Tonka and Littlest Pet Shop.

EA CEO John Riccitiello earlier this year said publically that it’s his aim to improve the management of work environment of the company’s developers and other employees. In the recent financial report, EA revealed that a December 2007 employee satisfaction survey showed significant improvement over the last appraisal in 2004. Results included a double-digit gain in employee engagement.

"A year ago, we committed to an aggressive change agenda at EA. Our employees stepped up to the challenge and we finished fiscal year 2008 with non-GAAP revenue up 30% to $4 billion – a record for any third-party publisher. Our operating margins were flat to our prior year. On balance, we're very pleased with our revenue growth, but not yet happy with our profit margins," said Riccitiello. "In fiscal 2009, we expect to deliver another $1 billion in revenue growth and to double our operating profit on the strength of our slate of titles."

[RPGWiZaRD]

^ That sure tells a lot how EA's trying to eat up the whole market by losing that much profit despite having that great sales.

[Calmatory]

I wish they'd die. :|

[rogueagent6]

^ That sure tells a lot how EA's trying to eat up the whole market by losing that much profit despite having that great sales.

Well the majority of that was from the Bioware purchase.

[FischOderAal]

I wish they'd die. :|

+1

they just buy any good brand and make a worthless series out of great games. that must not be rewarded.

[villa1n]

... a loss , assuming the asset they aquired has zero value... :/

[RADCOM]

Apparently they pay pretty well if anyones looking for a job

[[XC] gomeler]

I think EA is working on cleaning up their bad reputation, they've published a couple of good games this year and hopefully are on the way up.

^ That sure tells a lot how EA's trying to eat up the whole market by losing that much profit despite having that great sales.

Did you also read they bought Bioware for $860 million? So it's more like they made $406 million if you discount the purchase of Bioware.

Apparently they pay pretty well if anyones looking for a job

I have heard the same thing but I"ve been told they work you into the ground. A good way to get in on the field though.

[Jeremy617]

In a situation like this though, even though they reported a gaap loss of 454 million, their reconciled non-gaap income is 339 million. I'm not all that familiar with US GAAP but being that ea is a big IP company its likely their non gaap income is closer to the actual performance. The gaap results have alot of intangible amortization and $150m in stock based compensation.

[Jeremy617]

Did you also read they bought Bioware for $860 million? So it's more like they made $406 million if you discount the purchase of Bioware.

If they spent 860 million on buying something, that cost doesn't hit their income at all, unless after the purchase they determine that what they purchased isn't worth what they paid for it, which didn't happen.

A good example would be AMD's purchase of ATI, they took a huge goodwill impairment hit when they later re-evaulated the business worth of ATI and it was determined not to be worth as much as it was recorded on their books for.