EA: Account Overdrawn on Development?

According to financial analyst Colin Sebastian of Lazard Capital Markets, Electronic Arts could cut jobs and axe certain franchises in the coming quarter. Slow sales for Mirror’s Edge, Rock Band 2 and Need for Speed: Undercover have also contributed to the cut-back.

“While the videogame industry continues to show some resilience in the face of a very challenging consumer environment, strength does not appear to be across the board, and we believe that several EA titles are under-performing expectations at retail.

“Specifically, our checks indicate that sell-through trends of key holiday releases Need for Speed: Undercover, Rock Band 2, and Mirror’s Edge remain mixed, which may reflect some fatigue overall in the music and racing genres.”

Lazard Capital Markets is a spin-off of global investment bank Lazard, founded in 1848, with 2400 employees across 24 countries. Its revised EA 3rd quarter estimates are $2.07 billion and $1.23 per share, down from $2.14 billion and $1.30 per share. “We believe further cost and franchise reductions are likely,” stated Sebastian.

Does that mean we won’t get a Mirror’s Edge trilogy? Not likely, since other EA titles like Dead Space, FIFA 09 and Left4Dead sold “fairly well” - enough to offset the poor sales of other titles. Sebastian also said,

“We believe EA will leverage its early investments and significant resources in online distribution, emerging business models (e.g., free-to-play), and geographical diversity to maintain growth of its core franchise base, as well as further expand its partners/distribution business.”

EA incited panic this past Halloween when it posted a loss of more than $100 million and axed %6 of its work-force (roughly 600 employees). Hopefully, the holiday rush will contribute to some gain in the publisher’s fortunes.

(Source: GamesIndustryBiz) via Split-Screen

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