EA to cut 1,000 jobs, close studios
Electronic Arts Inc., the second- biggest video-game publisher, boosted planned job cuts to 1,000, or 10 percent of its workforce, and will consolidate or close at least nine studio and publishing locations.
The changes, to be carried out by March 31, will yield savings of about $120 million a year and cost as much as $65 million over the next several quarters, the Redwood City, California-based company said today in a statement. The actions expand on a 6 percent reduction announced in October.
The maker of "Madden NFL" warned of additional cuts on Dec. 9, when it lowered its full-year revenue and profit forecasts because of slow holiday sales in North America and Europe. Electronic Arts plans to scale back the roughly 30 games a year it now produces to focus on top-sellers.
"EA, and indeed the entire industry, needs to rationalize their product line-ups," said Todd Mitchell, a New York-based analyst with Kaufman Bros., who rates the stock "buy." "There are just too many games. Not every publisher needs to be in every genre."
Electronic Arts climbed 68 cents, or 4.1 percent, to $17.44 at 1:25 p.m. New York time in Nasdaq Stock Market composite trading. The stock had fallen 71 percent this year before today.
Outside of Nintendo Co., which sold more than 2 million Wii consoles in November, the slumping U.S. economy has hurt the video-game industry.
Fewer Titles
"We're going to be spending more on fewer titles," said Electronic Arts spokesman Jeff Brown. Three British Columbia studios will be consolidated into one facility as part of the change, he said.
Take-Two Interactive Inc., the New York-based maker of the "Grand Theft Auto" series, fell 26 percent yesterday after forecasting a first-quarter loss and full-year results that fell short of analysts' estimates.
Midway Games Inc., the Chicago-based maker of "Mortal Combat," is cutting 25 percent of its workforce, and Agoura Hills, California-based game publisher THQ Inc. is closing five studios and eliminating 250 jobs.