EA to Cut Jobs on Rising Losses

Electronic Arts has felt the retail slowdown brought on by a tumultuous economic environment.

On Thursday, the company posted $894 million for the second fiscal quarter ended September 30, an increase from $640 million a year ago.

However, net loss for the quarter increased to $310 million from a loss of $195 million year-on-year.

“Considering the slow down at retail we’ve seen in October, we are cautious in the short term,” said chief exec John Riccitiello in a statement. “Longer term, we are very bullish on the game
sector overall and on EA in particular."

The company revealed that it would be cutting about 6 percent of its total global workforce, or about 600 jobs to save a total of $50 million annually.

EA was able to move 4.5 million copies of Madden 09 during the quarter; 2 million copies of Spore; and 1.2 million copies of Warhammer Online (with 800,000 current players).

The firm also noted sales drivers Mercenaries 2, NCAA Football 09, Tiger Woods PGA Tour 09 and continued Rock Band sales.

Diluted loss per share is expected to be between 21 cents and earnings per share of 7 cents for the full year.

[UPDATE] EA rep Mariam Sughayer gave more details on the job cuts in a statement to Edge:

"EA is continuing to make progress against our business plan, but we have the constant imperative to keep our costs in line as we grow our revenues and improve our margins.

"Decisions that impact people’s jobs are always extremely tough but all of the people affected will be treated fairly and respectfully.

"We have begun a cost reduction initiative which will include eliminating approximately six percent of our existing workforce – or approximately 600 positions. We will also reduce hiring and close some open positions that we had previously planned to fill this fiscal year.

"All parts of EA have reviewed their team sizes to adjust employee numbers. The goal is to ensure we’re resourced in a way that allows us to continue to grow our revenues while at the same time keeping our costs under control and improving profitability. These changes will be announced to affected staff starting October 30.

"These are challenging economic times around the world, and it’s impossible for any business leaders to predict the future. However, EA has made good progress in improving product quality, building a holiday lineup of titles that is extremely strong, filling our new IP pipeline, and expanding our Direct-To-Consumer and online businesses. As well, our talent remains the best in the industry."