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EA Lowers Estimates, Plans Cuts As Sales Underperform
EA Lowers Estimates, Plans Cuts As Sales Underperform
December 9, 2008 | By Leigh Alexander

December 9, 2008 | By Leigh Alexander

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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Mike Lopez
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I noticed how much of EA's first round layoffs were inflicted on Pandemic. So much for Mr. Riccatello's earlier claim that this is the "new EA" that is not just looking to assimilate, chew up and spit out new developers for their IP and not their personnel.

What are the chances this next round also heavily impacts other assimilated studios?

Alan Rimkeit
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I second that sentiment. Looks like the Borg EA is still running at full steam. I wonder how over time pay is being handled by EA these days.

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.

Lo Pan
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It would be nice to see the Executive take a hit (take ownership) in these cases. The pattern of 'we screwed up, so your fired' never ends with US companies. John, how about your fire some Execs who mis-forcast and did not manage well?

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*nelson laugh*

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.

Da Man
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Come on. We all know, this is about money. I don't think anyone at EA's management just loves to fire people. They need to make profit. That's what a company is all about. I haven't hear of an inborn right to work in the video game industry, neither of a duty to do so. This is a hard industry and times are getting harder.

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.