Gamebox shift hits EA's bottom line

Videogame publisher takes a hit

By BEN FRITZ

No. 1 videogame publisher Electronic Arts saw its net income fall by more than half as heavy spending on the transition to next-generation consoles hit its bottom line.

Net revenue was down 4% at $613 million in the first quarter, the fourth on EA's fiscal calendar.

Excluding an accounting change, net income fell 56% to $19 million.

For the full fiscal year ending March 31, revenue rose 5% to $3.1 billion. Net income, excluding the accounting change, fell 18% to $247 million.

Drop was due to higher costs, especially in research and development, which can be largely attributed to the transition to the Xbox 360, Playstation 3 and Wii.

Bestselling titles in the past year were "Madden NFL '07," "Need for Speed Carbon," "FIFA '07," "The Sims 2: Pets," "The Sims 2," "Need for Speed: Most Wanted" and "2006 FIFA World Cup," all of which sold more than 3 million units worldwide.

Change in how it books revenue from some games is expected to weigh down EA's results this year to a substantial net loss between 77¢ and 23¢ per share. Excluding that change, however, net income is expected to rise from 78¢ per share to between 90¢ and $1.20 per share.

Guidance calls for revenue to grow modestly to between $3.1 billion and $3.4 billion.

EA stock rose 3% to $52.94 before earnings were announced Tuesday. In after-hours trading, they were down 3%.