Electronic Arts Inc. , the biggest video game publisher, posted a smaller quarterly profit Tuesday as it faced heavy competition during the holiday season from an unprecedented slate of blockbuster titles.
But its profit beat Wall Street expectations and shares of the publisher of "The Sims" and "Need for Speed Underground" rose more than 4 percent in after-hours trade.
"We continue to view EA as the dominant player in a pretty sure-growth industry," said Tobias Crabtree of Leeb Capital Management in New York, which owns 50,000 shares of EA for its clients.
Redwood City, California-based EA reported net profit for its fiscal third quarter ended Dec. 31 of $375 million, or $1.18 per share, compared with $392.3 million, or $1.26 per share a year-earlier.
Revenue fell to $1.43 billion from $1.48 billion. The fiscal 2005 figure included a $47 million foreign currency benefit.
Excluding certain items, EA reported a profit of $1.23 per share. Analysts polled by Reuters Estimates on average expected earnings per share for the third quarter of $1.17 on revenue of $1.42 billion.
EA's scale in the video game industry is clear in the December quarter, when it generates more revenue than closest competitors Take-Two Interactive Software Inc. and Activision Inc. do in an entire fiscal year.
The company had nine games that sold more than 1 million units in the quarter, seven of which passed 2 million units.
Chief Financial Officer Warren Jenson said widespread shortages of game consoles at the holidays had more of an effect in Europe than it did in North America.
"It was a very healthy software quarter, regardless," Jenson told Reuters.
EA said last year it would face a tougher holiday season than usual because of the number of blockbuster games on the market, like "Grand Theft Auto: San Andreas" and "Halo 2."
For the fiscal year ending in March, EA forecast earnings per share of $1.82 to $1.87, or $1.90 to $1.95 excluding items, on revenue of $3.28 billion to $3.33 billion. Those forecasts were at the lower end of its previous range.
Analysts had forecast earnings per share excluding items of $1.94 for the year on revenue of $3.3 billion.
For calendar 2005, EA forecast overall software sales growth from nil to 5 percent in both North America and Europe, with the biggest strength in hand-held platforms such as the Nintendo DS and Sony PSP.
It said its forecasts assumed no hardware price cuts this year.
Shares in EA rose to $60 in after-hours trade on Inet from a $57.54 close on the Nasdaq.
One analyst who asked not to be named attributed the stock rise to investors covering short positions, or sales of borrowed stock made on a bet that the shares will fall. EA stock's short interest, or number of shares that have been sold in that way, rose steadily over the last six months of 2004.
