Illustration for article titled Acquisitions Cause $454 Million In Losses For EA In Fiscal 08

Army of Two, Burnout Paradise and the continued strength of Rock Band drove Electronic Arts to $1.127 billion in sales for the fiscal fourth quarter, an 84 percent increase over the same period last year - but rather than turn a profit, EA took a $94 million loss.

Despite having 27 titles that sold over one million units during the year and a total $3.7 billion in sales, that loss on the quarter was only a portion of the company's overall $454 million loss on the year, a hefty blow after last fiscal year's $76 million profit.


However, both sales and revenue growth were decent for the company, beating analyst expectations. Crunching the numbers, it appears as if EA could have made around $30 million, if not for the costs largely due to its acquisitions - specifically the $620 million purchase of BioWare and Pandemic in October 2007, finalized in January 2008.

While Activision recently said it's the number one publisher in North America in dollars, EA says that its 19 percent market share in the region makes it the leader; EA's market share in Europe is 20 percent.
Instead of focusing on the loss, EA highlighted its successes, reporting itself the number one third-party Wii publisher in Europe throughout the year with 15 percent market share, eight points up from the year previous. Its North American market share on the Wii also was up one percentage point to 11 percent.


The company's "EA Partners" global distribution unit saw its strongest year yet, the company said, thanks to Rock Band and The Orange Box. As for EA's owned IP, the company gained a few in 2008 with MySims, Army of Two, Skate, Boogie, EA Playground and Smarty Pants, and gained development talent through the BioWare and Pandemic acquisitions. During the year EA also signed an agreement with Hasbro for the exclusive rights to create games based on Monopoly, Scrabble, Yahtzee, Nerf, Tonka and Littlest Pet Shop.

Notably attending to its prior bad acts, EA also said that its December 2007 employee satisfaction survey showed "significant improvemente" since 2004, with a double-digit gain in "employee engagement."


"A year ago, we committed to an aggressive change agenda at EA," said EA CEO John Riccitiello. "Our employees stepped up to the challenge and we finished fiscal year 2008 with non-GAAP revenue up 30% to $4 billion - a record for any third-party publisher. Our operating margins were flat to our prior year."

"On balance, we're very pleased with our revenue growth, but not yet happy with our profit margins. In fiscal 2009, we expect to deliver another $1 billion in revenue growth and to double our operating profit on the strength of our slate of titles."

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