Shares of Electronic Arts Inc. soared as the company announced cost-cutting measures after its wireless business suffered an estimated $368 million charge.
The Redwood City, Calif.-based publisher posted a $641 million loss including the pre-tax goodwill charge to its mobile division in the quarter ending Dec. 31. The write-down was necessary because of a drop in EA’s market value, CFO Eric Brown told Bloomberg.com, and likely reflects how the mobile-gaming space failed to take flight in the wake of EA’s $680 million acquisition of Jamdat in late 2005.
The venerable publisher did see moderate growth in wireless gaming, however, posting revenue of $48 million, up 23% over the year-ago period. And the quarter continued slow-but-steady growth in mobile, with EA posting increased revenues in its wireless business for the fifth straight quarter.
Like other mobile publishers, EA is wagering that multimedia-friendly handsets such as Apple’s iPhone can buoy a market long beset by onerous porting costs and troubled distribution channels.
The company, which is largely viewed as the No. 1 mobile game maker worldwide, said it will cut 1,100 jobs and close 12 of its facilities as it streamlines its product portfolio. “Our holiday quarter came in below our expectations and we have significantly reduced our financial outlook for fiscal 2009,” CEO John Riccitiello said in a prepared statement.
Investors responded warmly, sending shares of EA up $1.54, or 10%, to $17.04.
EA takes $368M hit on wireless gaming biz
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