Summary
Electronic Arts Inc. (EA) reported a net loss of $33 million, or $0.10 per diluted share, for the third quarter of fiscal year 2008, a reversal from the $160 million net income ($0.50 per diluted share) reported in the same period last year. This decline was primarily driven by a $231 million reduction in reported net revenue due to new accounting standards for online-enabled packaged goods and digital content, which requires revenue to be recognized over a six-month period rather than at the point of sale. Additionally, restructuring charges increased significantly to $78 million, largely attributable to the company's fiscal 2008 reorganization plan impacting facilities and employee-related costs. Despite the quarterly loss, the company reported an increase in cash and cash equivalents by $507 million, ending the period with $1.88 billion. The balance sheet also shows growth in total assets to $6.45 billion, with total current assets rising to $4.90 billion. The company's acquisition of VG Holding Corp. in January 2008 for approximately $780 million in cash and equity adds significant studios (BioWare and Pandemic) and intellectual property to its portfolio, though the full financial impact of this transaction will be realized in future periods.
Key Highlights
- 1Reported a net loss of $33 million for the three months ended December 31, 2007, compared to a net income of $160 million in the prior year period.
- 2Net revenue for the quarter decreased by $231 million due to new revenue recognition accounting for online-enabled packaged goods and digital content.
- 3Restructuring charges surged to $78 million, primarily related to the fiscal 2008 reorganization plan.
- 4Cash and cash equivalents increased by $507 million, ending the quarter at $1.88 billion.
- 5Total assets grew to $6.45 billion, with total current assets at $4.90 billion.
- 6Completed the acquisition of VG Holding Corp. (BioWare and Pandemic Studios) in January 2008 for approximately $780 million.