Electronics Arts Inc. (EA) hit investors with two pieces of news on Monday; one during market hours that did little to help the stock price and another, more substantial and surprising announcement after the closing bell that helped the stock pop upward.
First off, the Redwood City, California-based company said just after lunch that the latest iteration of its popular game SimCity notched more than 1.1 million units sold through its first two weeks, marking the best launch of a game in the SimCity franchise to date. The company said that about 54 percent of the sales were through digital download.
The company said that sales are outstripping expectations. Players have already logged more than 15 million hours of game time and more than 780 million original cities have been created in just two weeks, according to EA. Peter Moore, Chief Operating Officer for EA, commented, "SimCity is one of the storied brands in gaming, and Maxis delivered a game re-envisioned and engineered for the online age."
Shares still closed the day down by about 1 percent at $18.71.
After the bell, however, shares perked to $19.20 to put shares ahead for the day by more than 2 percent with the news that chief executive and board member John Riccitello was resigning his positions with the video game maker, effective March 30.
EA also said that quarterly results would probably come in at the low end of guidance, at best.
The resignation is likely the result of the performance during the current quarter as the company continues to struggle with dynamic shifts in the video game business as players move to online versions or even to free versions of other games, such as those offered by Zynga, Inc. (ZNGA). In fact, seeing the paradigm shift more than 100 employees left EA to head down the road to Zynga.
The board appointed Larry Probst as executive chairman until the company can find a permanent replacement for Riccitello. Probst, chairman of the board since 1994, formerly held the CEO position from 1991 to 2007, the time when Riccitello assumed the top executive job.
"We thank John for his contributions to EA since he was appointed CEO in 2007, especially the passion, dedication and energy he brought to the company every single day," said Probst in a prepared statement.
Riccitello took full responsibility for the recent results. He said that it “all comes down to accountability” and “EA’s shareholders and employees expect better and I am accountable for the miss.”
EA reported a 28 percent drop in adjusted revenue to $1.18 billion in the fourth quarter, shy of Wall Street expectations of $1.29 billion in sales.
Shares of EA have plunged about 66 percent since Riccitello took charge, although he did take the role just before the global economic meltdown and market collapse now known as the “Great Recession.” Unfortunately, however, shares did not recover under Riccitello’s command, although they have bounced off 14-year lows of $10.77 in July to nearly double since.
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