Electronic Arts Inc. (NASDAQ: ERTS) posted a net loss on a GAAP basis and announced plans to cut staff and close factories. It reported $0.56 EPS in non-GAAP earnings and  non-GAAP revenue of $1.74 billion.  Thomson Reuters (First Call) had estimates for the video game giant at $0.91 non-GAAP EPS on $1.92 billion in revenue.  Where this gets interesting is what lies ahead.

The company was very disappointedin the holiday quarter. It had already lowered guidance, and it looks like that is coming again.  The company sees a restructuring charge of $65 million to $75 million over the next 12  months. It will cut 11% or 1,100 workers andclose down 12 facilities.

The company said it is "aligning our coststructure with a lower projection of revenue, resulting inapproximately $500 million of operating expense reductions in fiscal2010 as compared with our previous plans."

EA’s guidance for fiscal March 2009 is a loss of -$0.35 non-GAAP EPSand non-GAAP net revenues of $about $4.1 billion.  These are well underthe March 2009 estimates of $0.65 EPS and $4.69 billion.

For the year, EA expects to earn $1.00 EPS on a non-GAAP basisand $4.3 billion in non-GAAP revenues.  The estimates for 2010(March-2010) are $1.18 EPS on $4.73 billion in revenue.   

Shares closed up 4.3% at $15.50 and are indicated down about 3% in during the after-hours session.

Jon C. Ogg
February 3, 2009

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