EA posts solid Q4 2003 profits

Top game publisher Electronic Arts put a few paces between itself and the competition today. The Redwood Shores, CA-based publisher posted some impressive sales numbers for the quarter ending December 31, 2003. During that period, four EA titles--Need for Speed Underground, The Lord of the Rings: The Return of the King, FIFA 2004, and Medal of Honor: Rising Sun--each sold more than four million copies. Not far behind was Harry Potter Quidditch Cup and NBA Live 2004, which each sold over 2 million copies during the quarter. Rounding out this pack of top sellers was Sims Bustin' Out, SSX3, Madden, Tiger Woods Golf, and Sims Makin' Magic, which sold in excess of one million copies each.

However, those solid sales numbers didn't catch Wall Street sleeping. EA ended the day down 89 cents, or 1.8% at $48.53. In after-hours trading, the publisher's stock fell over five percent, or $2.48. The reason? In an analyst call today, EA projected revenue for the quarter ending March 31, 2004, to come in at between $550 million and $570 million. While those figures are up 19% to 23% over the same quarter a year ago, it is short of analyst estimates calling for revenues of $570 million. For the full financial year, EA said it expects net revenue of $2.91 billion to $2.93 billion, but analysts had expected revenue of $2.93 billion or higher.

When asked how a company that beat Wall Street estimates one quarter and come in for such punishment by traders, Wedbush Morgan analyst Michael Pachter told GameSpot, "They beat [today], but lowered guidance for March quarter. Investors are focused on the future, not the past. If the past is good, it's an indication that the future will be as well, unless the company disabuses us of that notion…"

Counting out the pennies, EA's quarter looked like this: Net income for the quarter was $392 million, a 57 percent increase over the same period a year ago. Revenue rose to $1.48 billion from $1.23 billion a year earlier. By region, net revenue for North America was $753 million, up 8 percent; in Europe revenue was up 40 percent to $658 million; EA's Asia Pacific operations drove $43 million in net revenue, up 12 percent from the previous year; and Japan revenues were $21 million, down 29 percent.

CFO Warren Jenson cited growth in EA's back catalog of titles as well, saying in the call to analysts, "In the last twelve months we had 27 platinum titles--each selling more than a million units, compared to 22 platinum titles just a year ago.” The company reports releasing 15 titles and 48 SKUs over the last quarter; 17 titles if you include co-published products.