Electronic Arts Critiqued: Fool by Numbers

On May 8, Motley Fool Stock Advisor pick and video game maker Electronic Arts (Nasdaq: ERTS  ) released fourth-quarter earnings for the period ended March 31.

  • Revenue dropped by 4.4%, mostly because of gamers' transition to next-generation systems.


  • For Q1 2008, EA expects revenue between $300 million and $360 million, and a GAAP loss between $0.56 and $0.66 per share.


  • For FY 2008, EA predicts revenue between $3.1 billion to $3.4 billion, and a GAAP loss of $0.23 to $0.77 per share.

  • Electronic Arts currently earns three stars from our Motley Fool CAPS community, lagging behind fierce competitor Activision (Nasdaq: ATVI  ) but still beating Take-Two Interactive (Nasdaq: TTWO  ) and THQ (Nasdaq: THQI  ) .

(Figures in millions, except per-share data.)

Income Statement Highlights

Q4 2007

Q4 2006

Change

Sales

$613.0

$641.0

(4.4%)

Net Profit

($25.0)

($16.0)

N/A

EPS

($0.08)

($0.05)

N/A

Diluted Shares

310.0

304.0

2%

Get back to basics with the income statement.

Margin Checkup

Q4 2007

Q4 2006

Change*

Gross Margin

61.7%

61.9%

(0.3)

Operating Margin

(11.6%)

3.9%

(15.5)

Net Margin

(4.1%)

(2.5%)

(1.6)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2007

Q4 2006

Change

Cash + ST Invest.

$2,976.0

$2,432.0

22.4%

Accounts Rec.

$256.0

$199.0

28.6%

Inventory

$62.0

$61.0

1.6%

Liabilities

Q4 2007

Q4 2006

Change

Accounts Payable

$180.0

$163.0

10.4%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q4 2007

Q4 2006

Change

Cash From Ops.

$214.0

$337.0

(36.5%)

Capital Expenditures

$60.0

$36.0

66.7%

Free Cash Flow

$154.0

$301.0

(48.8%)

Free cash flow is a Fool's best friend.

Related Foolishness:

Activision and Electronic Arts are both Motley Fool Stock Advisor recommendations. To see what other stocks are helping subscribers crush the market, take a free 30-day trial to the newsletter service today.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.


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