EA reported its Q307 earnings, showing net revenue of $640 million for the quarter, a fall of 18 percent year-on-year from $784 million. EA Gross profit for the quarter was $245 million, down 45 percent year-on-year, while net loss for the quarter was $195 million compared with a net income of $22 million for the previous year. EA upped its full year prediction by $150 million to between $3.35 to $3.65 billion. EA expects to get 20 percent of the marketshare in both North American and Europe aggregated across the platforms, which is a fall of 2 percentage points but they think that fall is in the past.
Reorganization: EA is making good progress on reorganizing, which includes closing its facility in Chetsey, England and reducing staff by 350 people across studio and publishing divisions. EA expects to incur charges of $90-110 million for this, and get annual cost savings of $25-30 million.
Mobile: EA’s mobile business brought in $37 million for the quarter, up 6 percent year-on-year. Although it had top-selling games in NA and the UK, EA has reduced its full year revenue estimate for EA Mobile to $155 million, down from its previous estimate of $175 million. In the conference call this was put down to weakness in the North American market along with execution issues.
In-game advertising: In game advertising is $5 million in the quarter, EA expects to build it over time. There are revenue splits with the advertising, so it doesn’t all go to EA. Also, currently advertisers are largely restricted to sponsors but that won’t always be the case. EA expects in-game advertising to be a great business, but it’s not now. In the call it was said the full year ad revenue would be between $25-30 million.
Geographic breakdown: North American revenues fell 29 percent year-on-year to $362 million, which dragged down overall revenues because NA accounts for 57 percent of revenues (a year ago it was 65 percent of revenues). Europe remained pretty much steady bringing in revenues of $246 million, while Asia grew 19 percent to $32 million.
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