REDWOOD SHORES (dpa-AFX) - Video-game maker Electronic Arts Inc. (EA), Tuesday reported a decline in profit for the fourth quarter, as revenues declined with lesser production in packaged titles for consoles. Adjusted profit improved from last year, but still fell short of Street estimates, although revenues were in line with expectations.
Shares of EA, however, gained nine percent in extended trade with its full-year 2014 earnings outlook above current Wall Street estimates.
California-based Electronic Arts' fourth-quarter profit dropped to $323 million or $1.05 per share from $400 million or $1.20 per share last year.
Excluding items, adjusted earnings rose to $0.55 per share from $0.17 per share last year. On average, 24 analysts polled by Thomson Reuters expected earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.
EA's revenues for the quarter dropped to $1.21 billion from $1.37 billion last year. However, revenues, excluding changes in deferred revenues, grew to $1.04 billion from $977 million last year. Analysts estimated revenues $1.04 billion for the quarter.
The video-game maker, like all its peers, is struggling to keep up with change in consumer preference, as gamers are unwilling to buy expensive video-games and have switched to low-ticket mobile and web social games. Video game makers have since started focusing on development of web-based games. The company has reduced its packaged titles for consoles, while investing more resources towards the web.
Yesterday, EA said it signed a multi-year agreement with Walt Disney Co. (DIS) to develop and publish games based on the cult franchisee 'Star Wars' characters and storylines. Last month, Disney had announced its decision to discontinue Lucasfilm's video game division and focus on licensing deals.
Looking forward to the first quarter, EA expects earnings of about $0.33 per share and adjusted loss of around $0.62 per share. The company expects revenues of about $875 million and adjusted revenues of around $450 million. Analysts currently estimate a loss of about $0.36 per share and revenues of $542.73 million for the quarter.
For the full year 2014, the company expects a loss of about $0.97 per share and adjusted earnings of around $1.20 per share. EA expects net revenue of about $3.50 billion and adjusted revenues of around $4.00 billion. Analysts currently estimate earnings of $1.10 per share on revenues of $4.10 billion for the year.
Chief Financial Officer Blake Jorgensen said, 'EA has a solid operating plan with disciplined R&D spending and a sharp focus on delivering the best games and services. We are holding our FY 2014 operating expenses flat to the prior year - a significant achievement in a console transition year.'
EA closed Tuesday's trading at $18.41, up $0.12 or 0.66%, on a volume of 7.7 million shares on the Nasdaq. The stock further gained $1.67 or 9.07% in after hours.
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