EA Warns Of Revenue Drop In The Year Ahead News
Jon Wilcox
04/05/2006
As Electronic Arts posts its end of year results for 2006, the company announces a further drop is expected in 2007...
Electronic Arts has today announced its financial results for the fourth quarter and end of fiscal year 2006, which ended on March 31st 2006. With six titles selling over one millions copies in the quarter compared with just four during the same period last year, EA confirmed a rise in net revenues of 16%, from $553 million (£300.9 million) to $641 million (£348.7 million). However, the company posted a net loss of $16 million (£8.7 million) during the quarter, compared with a net income of $8 million (£4.4. million) in Q4 2005, which it blames on increased operating costs including acquisitions and restructuring.
Net revenues for the 2006 fiscal year saw a 6% decline on the year, from $3.13 billion (£1.70 billion) to $2.95 billion (£1.61 billion), whilst net income dropped by over 53% from $504 million (£274.2 million) to $236 million (£128.4 million).
With the final quarter of the year the first to see the dawn of the next-generation of consoles, it's worth nothing that the net revenue from sales of Xbox 360 title equated to $140 million (£76.2 million) and more than offset the drop in Xbox net revenues.
Electronic Arts has also announced its expectations for the first quarter of the 2007 fiscal year, which ends on June 30th 2006, and the full 2007 fiscal year. Citing key factors in deciding the 2007 end of year results, including the success of Sony's PlayStation3 launch and its subsequent supply, the company stated that it expected to see another drop in net revenues of between $2.70 billion (£1.47 billion) and $2.95 billion (£1.60 billion). The first quarter of the fiscal year is also expected to bring a drop to the EA with net revenues of between $300 (£163.2 million) and $340 (£186.0 million), down from the $365 million (£198.6 million) in Q1 2006, and $432 million (£235.0 million) in 2005.
Commenting on the results, Larry Probst, Chairman and Chief Executive Officer at Electronic Arts said, "This transition is more than a console upgrade...In addition to creating games for the PlayStation 3, Xbox 360 and Nintendo Wii, EA is positioning for global leadership in online, handhelds and mobile phones."
"We continue to invest ahead of revenues for long-term leadership," said Warren Jenson, Chief Financial and Administrative Officer. "We are well into the console transition and now have more than 30 next generation games in development."
We'll have more from EA shortly...