Bright outlook sends stock up after hours for Electronic Arts

Electronic Arts reported a fourth-quarter profit Tuesday that slightly missed Wall Street estimates, but gave an optimistic forecast for the year ahead, as the second biggest U.S. video game maker prepares for the launch of nextgeneration game consoles.

The earnings report capped a rocky quarter in which the Redwood City company ousted its chief executive officer, trimmed costs and scrambled to fix the embarrassing, trouble-plagued launch of its much ballyhooed reboot of its “SimCity” franchise.

“It was a challenging year with both hits and misses on the product front,” Frank Gibeau, president of EA Labels, said during a conference call with analysts.

Shares in the company rose about 8 percent in after-hours trading after closing up 12 cents at $18.41 per share.

Profit excluding some items was 55 cents per share, up from 17 cents a year ago. Sales excluding changes in deferred revenue rose 6.4 percent to $1.04 billion in the period that ended March 31, beating the $1.03 billion estimate.

The results suggest optimism after a disappointing year for Electronic Arts, which missed forecasts and ousted Chief Executive Officer John Riccitiello in March. This fiscal year, the company forecasts adjusted earnings of $1.20 per

share, above the $1.10 projected by analysts. Electronic Arts has cut jobs and reduced expenses to cushion against a potentially rocky transition to new consoles, said Chief Financial Officer Blake Jorgensen.

“We expect some continued softness in the packaged goods business,” Jorgensen said. “We’re still in a console transition phase.”

The search to replace Riccitiello is continuing, Jorgensen said. Riccitiello resigned when the company lowered its outlook the most recent time, in March.

“The world is changing, and technology is about to take another leap forward,” said Executive Chairman Larry Probst, who has returned to temporarily take over for Riccitiello. “EA is in very good shape.”

Fourth-quarter profit, excluding items, missed the 57-cent average of 23 analysts’ estimates compiled by Bloomberg. Net income fell 19 percent to $323 million ($1.05 per share) from $400 million ($1.20) a year earlier.

Looking to Web

Like other game makers, Electronic Arts has reduced the number of packaged titles it makes for consoles to devote more resources to the Web. As users gravitate to mobile and online games, sales of $60 console games have declined.

Digital revenue rose 8.1 percent to $453 million in the fourth quarter. The increasing reliance on online delivery will help lower the company’s tax rate and could contribute 5 cents per share to fiscal 2014 profit, Jorgensen said.

EA received a big boost from the March release of “SimCity” — about 50 percent of the 1.6 million copies sold were through “high-margin” digital downloads, Gibeau said.

Sales were strong even though EA was caught short of enough servers to handle the launch rush.

“We learned our lesson,” Gibeau said. “This will not happen again.”

New-console boost

The industry is anticipating demand for games will be spurred by a new PlayStation 4 from Sony Corp., arriving in time for the holidays, and the next Xbox from Microsoft, which has scheduled a May 21 announcement.

Electronic Arts is also moving to regularly update titles such as “FIFA” soccer and “Battlefield” with new material. Monday, the company announced a multiyear agreement with Walt Disney Co. to create games based on “Star Wars” characters, after Disney said it would stop making them itself.

The company is planning to release 11 new major titles in the next fiscal year, compared with 13 last year, and 15 more on the mobile Android and iOS platforms.

Boosted by titles like “The Simpsons Tapped Out” and “Real Racing 3,” mobile games generated $104 million in revenue for the fourth quarter, a 21 percent increase from the previous year.

“We are now placing greater emphasis on mobile games and less emphasis on social games,” Jorgensen said during the earnings call.