What is the primary reason for the increase in net loss compared to the prior year's quarter?

The primary reason for the increased net loss is the adoption of SFAS No. 123R, which requires the expensing of stock-based compensation. This resulted in $37 million of stock-based compensation expense recognized in the current quarter, which was not significantly present in the prior year's comparable quarter.

How is Electronic Arts managing the transition to next-generation consoles?

EA is investing heavily in Research and Development for next-generation consoles, online, and mobile platforms while continuing to develop titles for current-generation consoles. The company anticipates potential declines in current-generation sales as consumers transition and expects development costs for new platforms to be higher.

What is the company's liquidity position, and how is it funding its operations and acquisitions?

EA maintains a strong liquidity position with $2.397 billion in cash, cash equivalents, and marketable securities as of June 30, 2006. The company believes this is sufficient for operating requirements, capital expenditures, and planned acquisitions. They may also seek additional capital if opportunities arise.

What is the impact of the JAMDAT acquisition on the company's financial results?

The acquisition of JAMDAT Mobile Inc. has positively impacted the mobile segment, contributing to an increase in net revenue from mobile products. However, it also led to increased development and operating expenses associated with growing this business area.

EA 10-Q Quarterly Report Q1 FY2007 — Revenue, Net Income, EPS

Summary

Electronic Arts Inc. (EA) reported its first quarter fiscal year 2007 results ending June 30, 2006. The company experienced a 13% increase in net revenue, reaching $413 million, driven by strong sales of titles like '2006 FIFA World Cup', 'Battlefield 2: Modern Combat', and 'Need for Speed Most Wanted'. However, net loss widened to $81 million, or $0.26 per diluted share, compared to a loss of $58 million, or $0.19 per diluted share, in the prior year's first quarter. This widening loss is significantly influenced by the adoption of SFAS No. 123R, which mandates the recognition of stock-based compensation expense, contributing $37 million to operating expenses in the quarter. Operationally, EA continues to navigate the transition to next-generation consoles, with increasing R&D investments. The company also saw growth in its mobile segment, boosted by the recent acquisition of JAMDAT. Despite the increased net loss, the company maintains a strong liquidity position with substantial cash and short-term investments and expects them to be sufficient for operating requirements and planned acquisitions, including the pending acquisition of Digital Illusions C.E. (DICE) and the recently completed acquisition of Mythic Entertainment.

Key Highlights

1Net revenue increased by 13% to $413 million for the quarter ended June 30, 2006.
2Net loss widened to $81 million ($0.26 per diluted share) from $58 million ($0.19 per diluted share) in the prior year's quarter.
3Adoption of SFAS No. 123R led to $37 million in stock-based compensation expense, significantly impacting profitability.
4Strong performance in mobile gaming, driven by the JAMDAT acquisition, contributed to revenue growth.
5Significant investments in Research and Development continue, particularly for next-generation consoles and online platforms.
6The company maintains robust liquidity with $2.397 billion in cash, cash equivalents, and marketable securities.
7Upcoming acquisitions of Digital Illusions C.E. (DICE) and the recent acquisition of Mythic Entertainment signal ongoing M&A strategy.

ELECTRONIC ARTS INC. Quarterly Report for Q1 Ended Jun 30, 2006

Summary

Key Highlights

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