One word: Ouch.
Since issuing a fourth-quarter earnings warning on March 21, Electronic Arts
As a result, EA shares dropped another 11% to $46.84 in after-hours trading.
Fourth-quarter revenues were down 8% to $553 million from the same period last year, supported by strong sales of games such as NBA Street3, Fight Night Round 2, Need for Speed Underground 2, FIFA Street, and a new Time Splitters title. The company also claimed three of the top 10 selling titles for the recently released Sony
However, net income fell from $90 million (last year) to $8 million over the same period this year, or $0.02 per share. Adjusted for certain charges -- including a $21 million litigation charge related to a dispute regarding employee overtime pay -- the company earned $0.09 per share, meeting analysts' revised estimates.
And looking ahead, the road gets bumpier as the company prepares for the transition to the next-generation consoles from Microsoft
For the full year, the company expects revenues to climb 9% to 12% to between $3.4 billion and $3.5 billion. EA also forecast GAAP earnings of $1.55 to $1.70 per share, compared with the $1.73-per-share analyst estimate. The company earned $1.59 per share in the just-completed fiscal year.
EA has had it tough in the past couple of quarters, trying to compete among long-awaited blockbuster hits such as Take-Two Interactive's
That said, EA is still by far the best player in the game, and I don't see things getting much worse from here. And while I don't think the stock is in value territory, I do think EA shares are reasonably priced at current levels.
Fool contributor Jeff Hwang owns shares of Electronic Arts.
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