Electronic Arts forecasts annual bookings below estimates as gamers cut spending
Updates shares, adds analyst comment in paragraph 4,10
By Zaheer Kachwala
May 7 (Reuters) - Video game publisher Electronic Arts EA.O forecast full-year bookings below Wall Street estimates on Tuesday amid a broader spending slowdown in the gaming industry due to an uncertain economic outlook.
The company's shares fell 2.5% in extended trading.
EA also authorized a new three-year stock buyback plan totaling $5 billion.
"Issuing buybacks will help offset some of the negative sentiment on the short term, but game publishers should be working toward 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 6758.T and "Grand Theft Auto" maker Take-Two Interactive TTWO.O, have been aggressively cutting costs in recent months to combat the economic uncertainty and slumping game demand.
EA cut its workforce by 5% 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 $7.30 billion to $7.70 billion, compared with average analysts' estimate of $7.76 billion, according to LSEG data.
For the fourth quarter, the company, which also makes games like "Star Wars Jedi: Survivor", posted bookings of $1.67 billion, missing estimates of $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 $1.15 billion and $1.25 billion, compared with estimates of $1.44 billion.
On an adjusted basis, the company earned $1.37 per share in the fourth quarter, compared with estimates of $1.52 per share.
Reporting by Zaheer Kachwala in Bengaluru; Editing by Tasim Zahid
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