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EA reports profit, new AOL deal

Game publisher Electronic Arts posts a bigger first-quarter profit and reveals a new contract with AOL that's expected to boost its troubled online gaming unit.

Video game publisher Electronic Arts reported a bigger profit for its first quarter and announced that it renegotiated its online game partnership with America Online.

EA signed a deal with AOL in late 1999 under which, in exchange for promotion by AOL, it agreed to provide the online giant content from its online gaming subsidiary. EA also agreed to pay AOL at least $81 million over the course of the five-year agreement and give it a cut of a projected spinoff of the online gaming business.

The AOL deal has been considered a contributing factor for ongoing losses by EA's online division, which includes casual games offered through and subscription games such as "The Sims Online." EA recently stopped reporting separate financial results for the online division and now folds the numbers in with its overall results.

EA announced during its first-quarter earnings statement Wednesday that it had revamped the deal with AOL to eliminate payments to the online giant. AOL instead will pay EA for access to premium games and other content.

EA executives declined to disclose precise financial conditions of the deal during a conference call with analysts but said it's a sign of the growing strength of EA's online assets.

"We have now gone from paying for access to being paid for our content," said Warren Jenson, chief financial officer.

AOL has increasingly looked to games as a way to boost subscription revenue, unveiling new premium game services last year.

EA reported net income of $18 million, or 12 cents a share, for its fiscal fourth quarter, which ended June 30. That compares with a profit of $7.4 million, or 5 cents a share, in the same period a year ago.

Revenue for the quarter was $353 million, up from $332 million a year ago.

Game publishers typically record the bulk of their sales and profit in the final quarter of the calendar year, when major new titles are released to compete for holiday sales.