EA Laying Off 600 As Revenue, Losses Rise, Citing Weakening Retail
Electronic Arts' fiscal second quarter saw revenues rise -- but losses widened considerably, and wary of weakening retail, the company is laying off employees.
Madden NFL 09, Spore, Mercenaries 2, NCAA Football 09, Tiger Woods PGA Tour 09 and Warhammer Online's strong launches, alongside continued strength for Rock Band, drove EA's overall revenues to $864 million, a 33% boost over last year's $650 million -- but losses reached $310 million, as compared to $195 million last year.
The major publisher's cost reduction plan includes a reduction of its work force of about 6 percent, approximately 600 employees. Through the layoffs, the publisher hopes to gain pre-tax savings of $50 million.
"Considering the slow down at retail we’ve seen in October, we are cautious in the short term," said EA CEO John Riccitiello in the company's results statement.
As for the layoffs, "It’s a global reduction, not just focused on one studio or one location," EA spokesperson Mariam Sughayer told Gamasutra today, explaining that the affected employees were informed this week.
"The decisions that impact people's jobs are always extremely tough, but all the people affected will be treated appropriately and respectfully, with the appropriate severance package based on their time at the company and other mitigating factors."
"While we had good progress in growing revenue and increasing product quality, we have an ongoing imperative to manage our cost structure," Sughayer says. Also included in the cost-cutting initiatives will be a reduction in hiring and the closure of open positions, Sughayer adds.
The company still feels positively about its holiday pipeline, which Sughayer says is "extremely robust." And Madden NFL 09 has sold 4.5 million copies, Spore has sold 2 million, and Warhammer Online sold 1.2 million copies during the quarter ended September 30th.
EA also again highlighted a quality boost for EA Sports titles, noting a 4 point year-over-year increase in aggregated Metacritic scores on both Xbox 360 and PlayStation 3.
Riccitiello concluded his official statement by noting: "Longer term, we are very bullish on the game sector overall and on EA in particular. The industry is growing double-digits on the strength of three new game consoles and increases in the number of homes with broadband internet connections," he continued.
"EA is well-positioned to benefit from these technology drivers due to the strength of our creative studios and our broad collection of game properties -- from The Sims to Spore and Madden NFL to Warhammer Online."
[UPDATE: Tying in with Sughayer's comments that the reduction is 'global', some of the studios that have been affected by layoffs today, according to Gamasutra's sources, include Electronic Arts Los Angeles and Pandemic.]