Video game publisher Electronic Arts Inc (ERTS) said Friday that it plans to cut 1000 jobs or 10% of its workforce, which is 4% more than the 6% cut it announced on October 30.
The Redwood City, California-based company also said it plans to consolidate or close at least nine studio and publishing locations.
Among the facilities the company plans to close is the Black Box Studio facility in Vancouver, British Columbia. The Black Box development teams and associated game franchises will move to a nearby EA studio located in Burnaby, British Columbia.
Electronic Arts famous for its Rock Band and John Madden NFL football franchises, had warned last week that its fiscal year 2009 revenue and earnings would miss its prior outlook due to lower than expected sales across North America and Europe.
At that time, the company had said it was continuing to pursue cost saving initiatives including a reduction of its product portfolio for fiscal year 2010 with more job cuts and facility consolidations.
The company said Friday it expects the job cuts and restructuring to yield annual cost savings of about $120 million and to result in restructuring charges of about $55 million to $65 million over the next several quarters. Most of the job cuts will be completed by March 31, 2009, the company added.
Electronic Arts said it is working on a plan to narrow its product portfolio to focus on hit games with higher margin opportunities. At the same time, the company said, it remains committed to taking creative risks and investing in new games.
Electronic Arts dropped its $2 billion offer for rival Take-Two Interactive Software Inc. (TTWO) in September, seven months after pursuing the publisher of the hit "Grand Theft Auto" game series.
In October, Take-Two said it has decided to continue its business as an independent company after concluding its review of strategic alternatives.
The video game industry is becoming highly competitive, and companies are trying to own as much franchises as possible either through acquisition or tie ups. The ongoing economic crisis, which has caused a sharp pull back in consumer spending, is putting further pressure on video game publishers.
In July, one of EA's closest rivals, Activision Inc., merged with the games unit of France's Vivendi SA to create Activision Blizzard Inc. (ATVID). It is currently the world's largest video-game maker.
Earlier this week, Take-Two reported a wider net loss for the fourth quarter., with the company's quarterly earnings per share, excluding items, coming in below analysts' expectations. At the same time, the company set first quarter and fiscal year 2009 financial targets sharply below analysts' estimates.
Shares of Electronic Arts are currently trading at $17.42, up 66 cents or 3.94%. The shares trade in a 52-week range of $15.50 to $60.35.
http://www.quote.com/news/story.action?id=RTT812191205001130
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