EA Hopes Harry Potter Will Pull Rabbit Out Of Hat
06 5월 2009 - 9:30PM
Dow Jones News
SAN FRANCISCO (Dow Jones)-Electronic Arts Inc. (ERTS) has tried
all sorts of management magic to improve its profitability. Now,
it's hoping a magician will raise its net income.
The Redwood City, Calif.-based videogame maker is hoping a game
based on Harry Potter, the fictional wizard in training, will boost
its sagging performance when it hits stores later this year. The
title, "Harry Potter and the Half-Blood Prince," is based on the
latest movie in the popular franchise and is expected to arrive in
June.
EA could certainly use a hit. On Tuesday, the company reported
the latest in a string of quarterly losses. It hasn't posted a
profit in over two years.
The company's shares rose 1.6% to $21.38, but fell sharply
after-hours.
Since October, Chief Executive John Riccitiello has waved a wand
over the company to conjure up some cost-cutting. EA has closed
five of its game production studios, chopped headcount by more than
11% and many games that weren't performing well. But the spell of
cost-cutting is wearing off; in a post-earnings interview, Eric
Brown, the chief financial officer, said EA is ahead of its
cost-cutting goals, adding, "we're done."
That means the focus shifts to growing revenue, a difficult task
in the face of recession-weakened sales. In March, sales fell 17%
from the year-ago period and this year's overall growth is expected
to be only about half of what it was last year.
Fixing the revenue issue has been a problem for EA. As the
recession lingers, game buyers have stuck to titles in series
they've previously enjoyed. With the exceptions of the "Grand Theft
Auto" and "Madden" franchises, as well as "The Sims" series, which
sees a new title in June, EA has generally had trouble generating
buzz for its games.
That's why EA is banking on Harry Potter, one of the most
powerful franchises its had in years. The company once estimated
"Harry Potter and the Half-Blood Prince" could boost earnings per
share by 15 cents, which is roughly 15% of its expected per share
profit for the fiscal year ending March 31.
Harry Potter is only the start though, EA believes. Seven of the
upcoming EA games for Nintendo Co. Ltd.'s (NTDOY) Wii game console
are expected to be at least million sellers, including the upcoming
EA Sports Active.
Meanwhile, EA's backing its "Sims 3" release with a big
marketing campaign that begins in about two weeks.
But most of the responsibility rests on Harry Potter. Investors
had better hope that's not too much pressure for a young wizard
apprentice.
-By Ben Charny; Dow Jones Newswires; 415-765-8230;
ben.charny@dowjones.com