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.

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