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Electronic Arts is Delivering Across Platforms

Posted on Friday, Mar 7th 2014

The recent launch of new video game consoles of Xbox One and PS4 have resulted in slowing down of game software sales as the publishers are yet to create games geared for these consoles. However, publisher Electronic Arts (NASDAQ: EA) does not have much to worry about. According to NPD, during December, three games by Electronic Arts were in the top ten listing. Shooter game Battlefield 4 was the second highest selling game with Madden NFL 25 coming in fourth and FIFA 14 at the ninth place. As Electronic Arts continues to expand their digital offerings, their revenue growth is returning.

Electronic Arts’ Financials

Electronic Arts’ third quarter revenues grew 33% over the year to $1.57 billion, falling short of the Street’s projections of $1.66 billion. EPS of $1.26 was, however, ahead of the market’s targeted earnings of $1.23 per share.

Mobile was the high growth segment for the company with December recording the highest ever downloads in a month. Overall, their games were downloaded 71 million times on Apple and Google stores. Mobile and handheld digital revenues grew 26% over the year to $125 million.

By segment, digital revenues grew 27% over the year to $517 million and published and packaged revenues grew 38% over the year to $1.03 million. Distribution revenues fell 15% to $28 million.

For the current quarter, Electronic Arts projected revenues of about $800 million, significantly short of the market’s estimates of $829 million. EPS of $0.09 was in line with the Street’s projections. Electronic Arts expects to end the year with revenues of $3.91 billion, lowering their earlier anticipated projection of $4 billion. EPS expectations for the year increased from $1.25 earlier to $1.30.The Street was looking for the year’s EPS at $0.93.The growth in margins is attributed to the increasing contribution of digital segment to their revenues.

Electronic Arts’ Game Releases

This March, Electronic Arts is expecting to release the much awaited game Titanfall for Xbox consoles. Over the last year, they have delivered several new games across multiple platforms, but the releases have rarely been bug-free. The online version of SimCity 5 fell through initially because of the unanticipated traffic to the site, and Battlefield 4 designed for Xbox has been plagued with bugs that should have been detected before release. With Titanfall, Electronic Arts will need to improve their market image by proving that they can deliver better games, even on the cloud.

Meanwhile, Electronic Arts continues to deliver games for the older version of the console. They recently announced that they will release a standalone FIFA World Cup 2014 game for PlayStation 3 and Xbox 360 in April this year that will cater to the soccer World Cup fans. The game is also expected to help Electronic Arts improve their market presence in Brazil as it features 21 new stadiums including all the 12 stadiums in Brazil where the World Cup will be held.

As part of their mobile game line-up, earlier this year, they released Dungeon Keeper, a remake of the popular 1990s game, for iOS and Android devices.

EA’s stock is trading at $29.21 with market capitalization of $9.04 billion, close to its 52-week high of $29.65. 


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