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EA Lowers Estimates, Plans Cuts As Sales Underperform
by Leigh Alexander
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December 9, 2008
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Electronic Arts says holiday sales across North America and Europe have not met expectations, and thus neither will its 2009 financial results.
To compensate, EA says it'll cut titles from its slate for next year, reduce headcount and consolidate facilities, although it didn't further specify those cost reduction plans.
"While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations," said EA CEO John Riccitiello, Chief Executive Officer, also citing the "uncertain economic environment" as motive for the planned cost reduction.
"While we are cutting costs, we remain committed to investing in great game quality, in new properties and in our direct-to-consumer initiatives," Riccitiello added. "We will be launching several new titles and online games in fiscal 2010."
Although Lazard Capital Markets analyst Colin Sebastian recently said he felt EA was positioned to weather the downturn, he also lowered his own estimates for EA. The analyst suggested that Mirror's Edge and Need For Speed were underperforming, and predicted further cost reductions for EA beyond the 600 layoffs the publisher announced at the end of October.
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What are the chances this next round also heavily impacts other assimilated studios?
This is the very reason I am glad that EA did not eat Take Two. Absorb, digest, absorb, digest. How very sad for all those hard working people.
haw haw EA, you put all your best games on the HD systems and still got your ass kicked by nintendo. I dont want boom blox, there should have been wii versions of those HD action games you put out.
The death of PS2 (PSP too, from some perspectives) and the costly development of New Gen, coupled with the horrific economic times we're enduring... makes ours a scary industry to be a part of.
The death of PS2 (PSP too, from some perspectives) and the costly development of New Gen, coupled with the horrific economic times we're enduring... makes ours a scary industry to be a part of.
I'd rahter see EA lay off few people now instead of going bankrupt, which would mean far more people losing their jobs. And: EA's individual developers are all far-above-average talents. They will find new jobs.