EA boosts layoffs to 10 percent of workforce

Electronic Arts announces plans to broaden the scope of its layoffs, to close or consolidate nine locations, and to reduce its product line.

Updated 8:02 a.m. PST with more information about EA's decision to increase the size of its layoffs and with Friday's share price performance.

Game publishing giant Electronic Arts announced Friday that it is expanding the scope of its previously announced layoffs and will cut 10 percent of its workforce, as well as close nine studios and publishing operations and reduce its product lines.

The bulk of the now approximately 1,000 layoffs are expected to be completed by March 31, with the company hoping to save $120 million in annual costs.

In late October, EA had said it would be cutting 6 percent of its workforce, but it boosted that figure as its outlook for 2009 grew bleaker.

EA is also slimming down its product line, as it focuses on its more profitable hit games . That said, however, the company noted it will continue to invest in new games, as well as games for mobile devices and online play.

As part of the restructuring, EA also plans to close its Black Box Studio in Vancouver, British Columbia, and move the development teams and related game franchises to its studio in Burnaby, British Columbia. In total, the company plans to close or consolidate at least nine studio and publishing locations.

EA expects to take a restructuring charge of $55 million to $65 million over the next several quarters as a result of the layoffs and office closures.

The move by EA to trim its operations come as the game publisher finds its financial performance for 2009 will be challenged, as sales in Europe and the U.S. fall short of its earlier expectations.

When it lowered its 2009 expectations earlier this month, EA's chief executive John Riccitiello said in a statement:

While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations. Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business.

EA rose more than 4 percent to $17.52 a share in Friday morning trading.

 

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