Electronic Arts sees loss as it delays 3 games

By Franklin Paul

NEW YORK (Reuters) - Video game publisher Electronic Arts Inc posted weaker-than-expected results and said it would delay the release of several games, causing it to forecast a loss for the current fiscal year.

But EA shares rose 6.7 percent in what analysts called a relief rally as the company's outlook for fiscal 2010 was not as bad as some had feared. Shares of EA, which goes head-to-head with Activision Blizzard Inc for the title of biggest publisher, had hit a year-low on Monday.

"The most surprising positive thing, although I don't know if I believe it at this point, is their guidance for next year," said analyst Daniel Ernst from Hudson Square Research. "Their guidance seems overly optimistic in light of overly worse-than-expected results here. It's going to be very much a 'show me' story."

The publisher of popular franchises such as "Need For Speed" and "Madden NFL" forecast fiscal 2010 earnings before items at about $1.00 per share on net revenue of $4.3 billion. Analysts on average had expected earnings of $1.13 per share on revenue of $4.8 billion, according to Reuters Estimates.

EA's fiscal third-quarter net loss was $641 million, or $2.00 a share, compared with a loss of $33 million, or 10 cents a share, a year ago.

Excluding costs related to restructuring and other special items, EA had a profit of 56 cents a share for the quarter ended December 31, far short of analysts' expectations of 88 cents, according to Reuters Estimates.

While experts expect the video game software industry to manage the recession better than others, companies like EA have been hurt by tighter inventory management at retailers which don't want to overstock their stores with titles that are not huge hits.

For example, where retailers might previously have pre-ordered 1 million copies of a new title like the latest "Lord of The Rings" game, they may now only order 400,000, and might be slow to reorder additional copies, analysts said.