Electronic Arts lost less than analysts expected in the fourth quarter and expects to report 2002 revenue just below the current consensus estimate.
After market close Thursday, the largest independent publisher of game software reported a fiscal fourth-quarter loss of $11.8 million, or 9 cents per share, excluding special charges. First Call's survey of 13 analysts predicted a loss of 14 cents per share for Electronic Arts' fourth quarter ended March 31.
Shares of Electronic Arts traded at $54.89 in after-hours activity on the Island ECN, immediately following the release of quarterly results. Electronic Arts fell $1.53 to $54.52 in Thursday's regular trading ahead of the news.
During an afternoon conference call, Electronic Arts executives told analysts to expect the company's revenue in fiscal 2002, excluding revenue from EA.com, to grow in the mid-teens on a percentage basis from $1.28 billion in fiscal 2001. EA.com, which saw 2001 revenue of $42.1 million, will grow by 2.5 to 2.7 times in 2002, executives said.
A mid-teens increase roughly equates to overall revenue of almost $1.6 billion in fiscal 2002 for Electronic Arts. First Call consensus was predicting sales nearing $1.7 billion.
Mid-teens growth sounds realistic now that Sony (NYSE: SNE) has ironed out its production problems after a fiscal year hampered by its inability to ship as many PlayStation 2 consoles as originally expected, analysts said. The number of PlayStation 2 consoles purchased by consumers should hit 31 million worldwide by the end of Electronic Arts' fiscal year, if Sony meets its projections.
"I think they're looking at a pretty strong ༾," Lehman Brothers analyst Felicia Kantor said. "But I think everybody expects EA to come really strong from this gaming cycle."
Electronic Arts now claims far and away the largest share (40 percent) of the market for PlayStation 2 games. Although Electronic Arts executives expect to lose some of that share as other companies introduce more PlayStation 2 titles, the company's dominance of the largest console market should continue for the next 12 to 18 months, said James Lin, analyst with Jefferies.
"Over the next year and a half, I don't see anyone snagging market share from Electronic Arts," he said.
The company should be similarly positioned, analysts said, for the Xbox and Gamecube consoles expected later this year from Microsoft (Nasdaq: MSFT) and Nintendo.
Including goodwill write-downs and one-time charges, Electronic Arts lost $17.9 million, or 13 cents per share in the fourth quarter.
Fourth-quarter revenue rose 4.4 percent year-over-year to $307.3 million. Revenue excluding EA.com, as well as royalties and sales paid by EA.com to its parent company, was $294.41 million, up 2.5 percent from the year-ago period. EA.com revenue gained 88.3 percent to $12.84 million. >