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Electronic Arts Shares Tumble on Weak 1Q Forecast

Video-game maker Electronic Arts (NYSE:EA) posted a much stronger-than-expected fourth-quarter profit after nearly doubling digital revenues on demand for new video games, however it gave a bleak forecast for the current period.

The company's shares plunged nearly 10% to $13.68 after hours following first-quarter earnings and sales guidance that fell short of Wall Street expectations.

The company sees non-GAAP revenue in the first quarter of $500 million and a loss between 45 cents and 40 cents. The Street is forecasting a narrower loss of just 33 cents on sales of $579.4 million.

For fiscal 2013, EA sees non-GAAP revenue of $4.3 billion, with earnings excluding items between $1.05 and $1.20 a share. Analysts are looking for a full-year profit of $1.12 a share on sales of $4.49 billion.

The Redwood City, Calif.-based maker of SimCity and Battlefield 3 beat expectations in its latest quarter after providing the Street with a lackluster forecast in February.

EA posted net income of $400 million, or $1.20 a share, compared with a year-earlier $151 million, or 45 cents. Excluding one-time items, EA earned 17 cents, beating average analyst estimates in a Thomson Reuters poll by a penny.

Revenue for the three months ended March 31 was $1.37 billion, up from $1.09 billion a year ago. Excluding items, sales were $977 million, trumping the Street’s view of $957.9 million and edging ahead of its February forecast of $925 to $975 million.

Digital sales once again led the charge, with revenue from games including FIFA12, Battlefield and its new Star Wars game helping to double sales to $419 million from $211 million a year ago.

“Digital growth drove our margins in fiscal (2012) and we project this trend will continue in fiscal (2013),” said Electronic Arts interim chief financial officer, Ken Barker.

“We saw more than 20% non-GAAP diluted EPS growth in fiscal (2012), and are guiding to more than 30% growth in fiscal (2013) based on the midpoint of our guidance,” he said.