EA profit plunges 91% in 4Q
 

http://news.yahoo.com/news?tmpl=stor...ctronic_arts_6

I know we had a post on this recently, but I couldn't find it (couldn't search for "EA"), and this is more recent news. Also, feel free to move this to announcements forum, just wanted to post it here because I wanted more than two people to see it... :)

Stock fell 11.3% on this news. ]


"Electronic Arts announced fiscal fourth-quarter earnings Tuesday of $8 million, or 2 cents per share, compared with $90 million, or 29 cents per share in the same period of 2004."

"Company executives cited higher costs connected with purchasing licenses, growing competition and lower demand for games in anticipation of new set-top boxes, which are due to hit the market, as the reasons for its poor showing this quarter."

"Makers of video-game players, such as Sony and Microsoft are due to launch new video-game machines, and analysts say the public is uninterested in spending money on games designed for outdated equipment. Many consumers postpone new purchases until new versions of their favorite hardware and software are released, said P.J. McNealy, a senior analyst at American Technology Research."

Really? I thought the majority of customers weren't early adopters anyway. Another article in the LA times stated that the earnings were a result of "lower prices for games and higher development costs for tiles for the next generation of consoles." Which I guess does signal a call for a price hike in the next gen.

The NFL license probably hit the books in this quarter, so I can see that as a big licensing cost, though they didn't mention it specifically. Also, they really had no killer app out. I'm not sure if they had something last year that caused the sales to inflate more than usual...

The big problem with all of this was the EA execs that sold off a ton of their stock ahead of time when they knew this was coming.

Of course I'm sure that will get overlooked as usual.

My friend was offered a job at EA.. he had stories to tell. :lol:

Maybe it's because of all their craptacular games. The 007 game bombed. The NFSU game sucked. They just keep riding on the backs of Madden & The Sims. When ESPN killed Madden, EA had to eat it.

They're spending all their money buying properties to shit on and hip hop music for soundtracks. I wouldn't be surprised at all (pleased, actually) if they crashed and burned under their own mediocrity eventually. On the other hand, since people tend to buy games regardless of quality just because it says Harry Potter or James Bond or Lord of the Rings on it, I wouldn't be surprised if they got bigger. I do think they're a key player in the stagnant direction the "industry" is currently digging itself. Naming their last James Bond game "Goldeneye" is a prime example of EA's policy to ride the waves of another's success.

007?

Everything or Nothing?

That's an owesome game!

Now you just can't drop a bomb like that and not share one. -ohbfrank-

He means "Rogue Agent."

So do you have proof of this or are you going to just state it and not back it up?

I'm not sure you realize that 1) executives have limited windows they can sell their stock, and 2) executives usually have their shares in a trust account that they are regularly selling shares out of.

Considering that a lot of executives have a large portion of their net worth tied up in their company, and by owning a public company, this is an excellent way to diversify their portfolio.

But ... it's much easier to say that "execs are selling".

I was a bit drunk since it was his first time back in town for a long time.. but he mentioned the environment was quite different from when he worked at Lucasarts (he was hit by the big layoffs last year), I think the word "dismal" was used. He mentioned that they were offering him a LOT of money, but he would essentially be working 80 hours a week and he wasn't really down with that, which I think there were some stories some time ago about them overworking people, so he was pretty much saying it was true but you knew about going in there.

There is this woman who has an Livejournal chronicling the over working of her husband at EA. Of course you have to take this with a grain of salt, but I was really surprised to read how bad the guy was treated. I have aspirations to some day work in the industry, but I certainly hope EA is the exception and not the rule.

I can believe the long hours. Not only in the gaming industry, but in the programming industry in general, there are a lot of late nights and stress, especially as deadlines approach. Some companies understand the pressures and try to alleviate it somewhat, but others just crack the whip. And EA seems like a crack-the-whip, just-get-the-game-out-there kind of company.

Yeah, they've become a product mill. It's all cookie-cutter stuff, like Sport [year+1] stuff. Very lame. A profit drop of 90% is just an amazing corporate collapse, but it's probably well-deserved (for management, that is - certainly not for the poor saps in the trenches working 80 hours a week.)

- David Stein

That's what we call "insider trading." Maybe their federal prison will have a Nintendo so they can play Tecmo Bowl against the Enron guys.

- David Stein

Living in Vancouver, I personally know 4 people who either work for EA or have quit EA.

The two people who still work there are programmers, and they both said that due to the deadlines given, they practically do not have a life outside of work.

The other two who quit basically reiterated what was said above and a bit more:

- financial compensation is great as long as you are willing to work the hours
- hours meaning sometimes working 60 hours a week
- the Burnaby HQ provides the employees with almost everything...gym,
tennis/basketball courts, free video games, laundry service, great cafeteria
that serves a huge variety of cuisine, hotel-type rooms...anything to keep
you from going home. (I mentioned "almost everything" just in case one of
you would suggest if the company can provide hookers)
- you are basically discouraged from indulging in any other interests, as one
of my friends was prevented in teaching yoga part-time on the weekends

Right now, EA is starting to feel threatened as Disney has just announced it is opening up their videogame HQ here in Vancouver (as the recruitment of potential Disney employees would mean "pirating" some people fm EA). Not only that, other smaller but more innovative videogame companies are sprouting up such as Radical Entertainment and, in time, would either be bought out by bigger videogame companies like Microsoft or Disney. EA, with their financial distress, cannot just buy out companies like what it did before with Blackbox.

I'd imagine this profit dip has much more to do with the recent buying of licenses by EA (NFL), combined with buying a big portion of UBISOFT, rather than games flopping. They still had quite few succesful/really successful games, even though a few of their games did tank bad given the licenses (Goldeneye Rogue Agent, The Urbz). Hopefully the decline in sales on mediocre cookie-cutter games will force EA to re-evaluate it's strategy, especially given the 90% losses, but I doubt it. I expect this is just a downswing in profits until the real money starts rolling in from the NFL monopoly.

Yeah, I'm sure long hours come with the terrain. But I think those 60 hour weeks come closer to release time than all the time like you said (cracking the whip) at smaller houses. Especially since they have sooooo many games coming out, there is never a lull in production. A factory.

something like this is bound to get a shakeup; what board of directors would let a CEO do this to their company without punishment?

60 hour work weeks are nothing, especially if you're well compensated.

60 is too much for me, I've done it before for a few months, never again.

Luckily I'm not much of a consumerist and don't care about having a big house, expensive car, clothes etc. so I can get buy on a pretty small income. Though I should make decent money in 40 hour or less weeks after finishing my Ph D in a few years.

Thought this was common knowledge. Could have sworn the story was posted here in this forum. As always google it if ye doubt me.

Burst of selling by EA executives

By Dan Lee

Mercury News

Seven executives from Electronic Arts collected gains ranging from $1 million to more than $10 million each in late January from exercising options and selling shares in the world's top maker of video games.

The burst of selling on Jan. 28 to Jan. 31 came days after a positive earnings report as the stock climbed toward its all-time high closing price of $68.12 on Feb. 4.

EA's president of worldwide studios, Don Mattrick, had the biggest transaction. He exercised 275,000 options to buy EA shares for $23.27 each Jan. 28, according to a filing with the Securities and Exchange Commission. The same day he sold those shares for $62.11 each, for a gain of $10.7 million.

Chief Financial Officer Warren Jenson exercised options to buy 210,000 company shares for $30.82 each Jan. 28 to Jan. 31. He sold 200,000 of those shares over the same days for prices ranging from $62.18 to $62.90 each, for a gain of more than $6 million.

Also, EA Chairman and Chief Executive Lawrence Probst exercised options to buy 100,000 company shares for prices ranging from $6.16 to $7.47 each Jan. 31, according to an SEC filing. The same day he sold those shares for $63.72 each, for a gain of $5.8 million.

Others cashing in options from Jan. 28 to Jan. 31 for gains were: Executive Vice President of North American Publishing Nancy Smith ($2.4 million), Senior Vice President of European Publishing Gerhard Florin ($2 million), Executive Vice President of Human Resources J. Russell Rueff ($1.7 million) and director M. Richard Asher ($1.3 million).

``It was diversification,'' EA spokesman Jeff Brown said of the trades. ``The stock has been doing very, very well, and it was time to diversify their portfolio.

``EA has the most tenured team in the game industry. Many of our senior executives have been with the company for more than 20 years.''

Brown added that the trading window -- the time when insiders are allowed to trade company shares -- had just opened Jan. 25 after being closed for more than two months.

After those moves, Probst owned 739,341 EA shares, Asher 301,456 shares, Mattrick 50,000 shares, Smith 14,018 shares, Rueff 13,793 shares, Jenson 12,620 shares and Florin 6,002 shares, according to SEC filings.

The seven executives also held significant numbers of options to buy additional EA shares.

EA's stock price has more than quadrupled in the past five years. Shares of EA, which has been publicly traded since 1989, closed at $64.98 Friday.

Monthly sales: Trading under an automatic-sales plan established in 2002, Kyphon co-founder and Chief Science Officer Karen Talmadge sold 25,000 shares of the medical-device maker's stock for $26.98 each for a total of $674,500 on Feb. 1.

The transaction continued Talmadge's pattern of selling a small portion of her holdings in Sunnyvale-based Kyphon every month since May 2003. Over that time, she has sold 460,000 company shares for a total of $11.4 million, according to Thomson Financial.

She owned 570,000 Kyphon shares after the latest sale.

Shares of Kyphon closed at $25.07 Friday. The company makes instruments for surgery on vertebrae

Here is another one that came later on after the sell offs.


EA Executives to be Hauled Over Coals as Lying Claims Flare
Probst and Jenson in the dock, spotless run ends.
29th Mar 2005

Electronic Arts, long time videogame darling of the financial sector, is about to be dragged across the coals in front of the Northern California Federal Court, with two key executives accused of purposefully misleading investors for personal gain.

The case, to be fronted by class-action sharks Schiffrin & Barroway, seeks class-action status for anyone who bought shares of EA between January 25, when the company posted fiscal third-quarter results, and March 21, when it warned of a profit shortfall for the financial fourth quarter of 2004.

Damagingly for EA, Chief Executive Larry Probst and Chief Financial Officer Warren Jenson are named as defendants following a conference call on January 25, in which it is claimed the two key executives made misleading projections about the company’s status. Shortly after this call, Probst and Jensen sold around $19 million worth of EA stock.

The suit also claims that other insiders sold almost $20 million of stock during the class period, when the price rose 15%. Then, on March 21, EA warned that its profit for the quarter ending in March would fall below its prior forecast by as much as 25 cents per share, with the firm blaming weak sales and shortages of PlayStation 2 and Xbox hardware. It was the first ever mid-quarter profit warning from the software giant.

The suit claims “…that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that increased competition from its competitors was eroding EA market share; (2) that hardware shortages were material; (3) that EA continued to suffer from operating margin compression; and (4) that as a result of the above, the Company's statements about its financial performance were lacking in any reasonable basis when made."

EA shares have tumbled by around 20% since the profit warning was issued.

"We cannot offer any specific information about the suit and we do not comment on pending litigation", is the official company line at time of going to press.

Good EA can KISS MY ASS you killing F1 games,screwing DC owners, and kiss my xbox owning ass. DIE

Aww schucks EA, I was hoping for Catwoman 2.

Ding! Ding! We have a winner...