VIDEO game publisher Electronic Arts (EA) forecast full-year bookings below Wall Street estimates on Tuesday (May 7) amid a broader spending slowdown in the gaming industry due to an uncertain economic outlook.
The company’s shares fell 2.5 per cent in extended trading.
EA also authorised a new three-year stock buyback plan totalling US$5 billion.
“Issuing buybacks will help offset some of the negative sentiment on the short term, but game publishers should be working towards an upswing once the next console generation presents itself,” said Joost Van Dreunen, a lecturer at NYU’s Stern School of Business.
The dour forecast from EA will add to the industry’s already gloomy outlook, which has been coping with gamers cutting back on discretionary spending amid high inflation.
Large firms, including Japan’s Sony and Grand Theft Auto maker Take-Two Interactive, have been aggressively cutting costs in recent months to combat the economic uncertainty and slumping game demand.
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EA cut its workforce by 5 per cent in February as part of a restructuring plan, which includes a reduction in office space.
The company forecast fiscal year 2025 bookings in the range of US$7.3 billion to US$7.7 billion, compared with average analysts’ estimate of US$7.76 billion, according to LSEG data.
For the fourth quarter, the company, which also makes games such as Star Wars Jedi: Survivor, posted bookings of US$1.67 billion, missing estimates of US$1.77 billion.
“EA’s development pipeline remains strong although the timeline comes into question,” said Joe Brunetto, an analyst at Third Bridge.
New titles, such as Star Wars, could contribute to long-term growth, he added.
For the first quarter, the company expects bookings in the range of US$1.15 billion and US$1.25 billion, compared with estimates of US$1.44 billion.
On an adjusted basis, the company earned US$1.37 per share in the fourth quarter, compared with estimates of US$1.52 per share. REUTERS
