Electronic Arts Earnings: Is The Axe Mightier Than the Light Saber?
Video-game stalwart Electronic Arts (NAS: EA) reported fourth-quarter results last night, and The Force is fading quickly with this one.
Revenue in the quarter jumped 26% to $1.37 billion, with net income of $400 million, or $1.20 per share. On a non-GAAP basis, total revenue was just $977 million with $0.17 per share in profit. The company continues to focus on digital growth, with CEO John Riccitiello saying EA is taking on a "very different profile than the traditional game companies."
EA's PopCap games continues to grow on mobile platforms, looking to take on the likes of Zynga (NAS: ZNGA) , which had previously tried to acquire the studio before EA won the bidding war. However, all eyes were really on figures regarding EA's new massive-multiplayer online role-playing game, or MMORPG, Star Wars: The Old Republic.
Source: EA. Star Wars: The Old Republic.
After the game launched last fiscal quarter, seeing 2 million unit sales and 1.7 million active padawan subscribers, that figure has promptly plunged 24% to just 1.3 million subscribers after players opted not to renew their 30-day free trials. That's a troubling start for a game that EA was hoping would be a major growth driver as EA's push into the MMORPG world.
The real question is whether or not those Jedis are putting down their light sabers in favor of a good old-fashioned axe in Activision Blizzard's (NAS: ATVI) World of Warcraft. We won't have to wait too long to find out, as Activision releases its own earnings tomorrow after the close. Last quarter, Activision had 10.2 million quest-goers paying up each month, so we'll see whether some of those reformed Sith Lords turn up in Activision's results.
EA's guidance also left a lot to be desired. First-quarter adjusted revenue is expected to be about $500 million, with a loss per share between $0.40 and $0.45. Those figures are worse than the $579.4 million in sales and $0.33 per share loss that the Street thought was in order.
The game maker has hit a fresh 52-week low today, and while it recognizes that it needs to strategically focus on digital and mobile platforms, it's having trouble delivering.
EA's future is far from secure, but that doesn't mean yours can't be. Secure Your Future With 9 Rock-Solid Dividend Stocks that have steady profits and cash flow and give plenty of it back to shareholders. Check out the free report now while you still can.
At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned. Check out hisholdings and a short bio. The Fool owns shares of and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of and creating a synthetic long position in Activision Blizzard. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.