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Electronic Arts posts record annual sales

The video and computer games publisher reports record sales for fiscal 2002, buoyed by new game machines and franchises such as "Harry Potter" and "The Sims."

Leading video and computer games publisher Electronic Arts reported record sales for its fiscal 2002, buoyed by new game machines and franchises such as "Harry Potter" and "The Sims."

The company reported earnings of $47.3 million, or 33 cents a share, for the fourth quarter and $101.5 million, or 71 cents a share, for the full year, which ended March 31. That compares with a loss of $17.9 million, or 13 cents a share, in the same quarter last year and a loss of $11.1 million, or 8 cents a share, in 2001.

Sales for the quarter and the year were $469.7 million and $1.73 billion, respectively, compared with $303.7 million and $1.32 billion a year ago.

Excluding one-time charges, earnings were 39 cents a share for the quarter and 94 cents for the year. On that basis, analysts polled by research firm First Call had predicted earnings of 28 cents for the quarter and 83 cents for the year.

CEO Larry Probst attributed the growth to the company's broad support for new gaming systems such as Microsoft's Xbox and Nintendo's GameCube, particularly titles based on the "Harry Potter" movie, which sold 9 million units. Probst also touted improved results for EA.com, the company's money-losing online gaming arm.

"We increased EA.com revenue 83 percent for the year, and we reduced our operating expense run rate by over $15 million per quarter, compared to the fourth quarter last year," he said in a statement. "Our challenge for the coming year is to continue to monetize the extraordinary traffic and stickiness of our site through increased advertising and the release of key new subscription products."

Chief Operating Officer John Riccitiello said in a conference call with financial analysts that the company expects "The Sims Online," the upcoming online version of the smash PC game, to play a major role in helping push EA.com toward profitability in the 2003 fiscal year. The game is slated to go live during the third quarter, and EA expects to have 400,000 subscribers paying around $15 a month by the end of the year.

"We think it's going to be a very successful product that proves the online subscription model," Riccitiello said.

The company also expects impending price cuts for the major game consoles--expected to be announced at this month's Electronic Entertainment Expo or closer to the key holiday season--to provide a substantial boost for game sales. Probst said that hardware price cuts shouldn't affect what the company can charge for software, now around $50 for current console titles.

"We're assuming that we'll be able to maintain premium pricing," he said.