With the video game industry hitting a virtual wall during the console transition period, key players are starting to show signs that business has finally bottomed out.
On Tuesday afternoon, Motley Fool Stock Advisor selection Electronic Arts
The adjusted net loss of $0.12 per share (not using generally accepted accounting principles) came in well ahead of the analyst estimate of a $0.24-per-share loss, while the revenue figure blew away the $335 million analyst estimate. As a result, Electronic Arts shares were up 8% to more than $50 midday Wednesday.
A number of titles drove the better-than-expected results. By far the biggest was FIFA World Cup, which sold more than 2.8 million copies. It was the best-selling title in the U.K. for seven consecutive weeks, and in Germany for six consecutive weeks. The company also singled out Battlefield 2 for the Microsoft
The only real disappointment in the report was that Electronic Arts' outlook for the year remains mostly unchanged, suggesting caution heading into the long-awaited release of the next-generation Sony PS3. Despite handily beating its own forecast for a non-GAAP net loss of $0.28 to $0.22 per share for the first quarter, EA simply maintained its full-year outlook of non-GAAP earnings of $0.35 to $0.65 per share. The company did raise its full-year net revenue forecast slightly to account for the second-quarter performance: It now sees net revenue for the year at $2.8 billion to $3 billion, up from $2.7 billion to $2.95 billion.
For the second quarter -- featuring the release of the updated hit NCAA Football and Madden NFL series -- EA expects to break even on a non-GAAP basis.
The Outlook
Period |
Net Revenue |
GAAP EPS |
Non-GAAP EPS |
---|---|---|---|
Q2 2007 |
$635 to $685 million |
Net loss of $0.28 to $0.22 |
Break even |
FY 2007 |
$2.8 to $3 billion |
Net loss of $0.30 to break even |
$0.35 to $0.65 |
EA's report follows a better-than-expected report from smaller rival THQ
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Fool contributor Jeff Hwang owns shares of Electronic Arts and Activision. The Fool has a disclosure policy.