EA Beats Earnings Estimates, Announces over 16% of Jobs will be Cut - RaychelSnr's Blog

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EA Beats Earnings Estimates, Announces over 16% of Jobs will be Cut Stuck

Posted on November 9, 2009 at 05:46 PM.

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Electronic Arts announced earnings for the quarter today which beat analysts estimates. The company also announced 1,500 jobs will be cut as part of a continued restructuring effort. This batch of news, as well as news of the acquisition of Playfish sent EA Shares over 2.5% higher.

The big news out of this report seems to be the layoffs, which cover about 16% of the company's employees and it could effect any number of positions, but mainly in the research and development realm. This is a big round of layoffs and I'm sure it will effect operations in some manner, although I have serious doubts it effects the end product quality for sports games.

From a report in the LA Times, EA CEO John Riccitiello said, �We are making tough calls to cut costs in targeted areas and investing more in our biggest games and digital businesses."

Also game sales fell 13.5% compared to the same quarter last year, which is not surprising given the constricted consumer spending. If anything, the fall-off in sales is quite tame compared to the rest of the video games industry, which is seeing sales fall of as much as 35% off of totals last year.

Overall, the report was positive for the company, but very negative if you happen to be one of the 1,500 people about to be laid off. Going off what Riccitiello said, I don't expect this to effect Madden, FIFA, or any of EA Sport's big titles. What do you think about the report? Does anything surprise you?

Comments

# 1 elgreazy1 @ Nov 9

Just atypical practice from any major company. Think about it, the easiest cost cutting in business is down-sizing because you can't adjust your production, distrubtion, pricing, etc costs. Just sucks to see more layoffs continuing around the country.

From a consumer standpoint, it probably appears you will see even less work put into EA's yearly batches of sports games due to less employees. Research & development means innovation, new intellectual properties, etc, with these guys gone be prepared for recycled junk.

# 2 DubTrey1 @ Nov 9

It is not a surprise to me at all. It's a leader in it's field and it prioritizes it's spending and headcounts accordingly. I doubt this will effect the games EA makes in any adverse way that we the End User feels - if at all. It is unfortunate for those whom are being laid off though.