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EA wild about Harry Potter

Leading games publisher Electronic Arts reports a solid jump in earnings and revenue, buoyed by strong sales of games related to the Harry Potter movie.

Leading games publisher Electronic Arts reported a solid jump in earnings and revenue Wednesday, buoyed by strong sales of games related to the Harry Potter movie and "The Sims."

The Redwood City, Calif.-based company reported net earnings of $132.3 million, or 92 cents a share, for its fiscal third quarter that ended Dec. 31. In the same period a year ago, the company earned $88 million, or 63 cents a share.

Revenue for the quarter was $832.9 million, compared with $640.3 million a year ago.

Excluding one-time charges such as asset impairment and restructuring costs, Electronic Arts calculated earnings at $1.03 per share. On that basis, a consensus of analysts surveyed by First Call had expected the company to report earnings of 89 cents a share.

CEO Larry Probst attributed much of the growth to the bespectacled star of a series of games tied to the hit movie "Harry Potter and the Sorcerer's Stone."

"Harry Potter was our most successful launch title ever, with over 7 million units on four platforms," Probst said in a statement, adding that the introduction of Microsoft's Xbox and Nintendo's GameCube consoles helped boost overall interest in gaming at the end of the year.

Other strong franchises include "Madden NFL" football games and "The Sims" series, which has sold more than 12 million copies of the original game and various expansion packs since its introduction about two years ago.

Executives said one of the company's main challenges for the next fiscal year will be to boost revenue from, the company's online gaming arm, through increased advertising sales and subscription revenue from premium games. For the quarter, recorded a net loss of $44.7 million, but revenue nearly doubled, reaching $21.9 million.

EA attempted to cut costs in the online division earlier this year with a round of layoffs spurred by the acquisition of the free games site

Chief Financial Officer Stan McKee said during a conference call that ad-supported games, including those on the Pogo site, are close to break-even status, while the subscription business should kick into gear when an online version of "The Sims" appears late this year.

"We continue to believe that 'The Sims Online' is the killer app for that market," he said.

Sony's PlayStation 2 was EA's main format for the quarter, accounting for 27 percent of the company's overall sales. Xbox and GameCube represented 5 percent and 4 percent of sales, respectively; McKee said those percentages will increase in the current quarter as the systems arrive in Europe and Japan. "Both were strong coming out of the gate," he said.

The company also returned to portable games during the quarter, with Harry Potter titles for Nintendo's GameBoy players accounting for 7 percent of sales. Chief Operating Officer John Riccitiello said on the call that because of the high cost of manufacturing GameBoy cartridges, the company will continue to be picky in the handheld player market.

"We will do selected titles where we have a high level of confidence we can sell hundreds of thousands of units," he said.

Probst said on the call that he expects competition among console makers to remain brisk this year and help push software sales, especially if Sony makes expected midyear price cuts on the PlayStation 2. "As the market leader, I think Sony calls the tune as far as pricing," he said.