Godfather game delay leads to EA warning

A delay in the launch of a video game based on The Godfather movies prompted Electronic Arts to cut its revenues and earnings forecasts on Tuesday, adding to recent pressure on the biggest video game company.

The delay, which the company announced earlier this month, comes at a time when EA's outlook is already clouded by the transition to a new generation of games consoles, led by the Xbox 360 later this year, as well as rising costs for the rights to some of its biggest-selling sports titles.

The dollar's rise against the euro and sterling - a factor that has also started to weigh on the outlook of other US technology companies after a period when reported earnings were aided a falling US currency - had contributed to the lowered estimates for this year, the company said.

Meanwhile, EA's latest quarterly revenues dropped 16 per cent from a year before and it fell into a loss as its latest stable of games titles failed to live up to those of last year, which had featured a new Harry Potter title.

EA's shares, which had fallen nearly 5 per cent during the day, dropped another 3 per cent in after-market trading.

The risk of hardware delays and other issues that arise during a transition to new games consoles meant that EA was likely to experience unexepected problems at some stage in the comping months, said Warren Jensen, chief financial officer. “There simply is too much change going on for us to expect otherwise,” he said, though he added that EA believed it would be able to handle the transition better than other video game companies.

EA cut its revenue forecast for the current fiscal year, which ends in March, by around 3 per cent, to $3.3-3.4bn. The mid-point of its projected earnings range was cut by 6 per cent, to $1.45-1.60 a share.

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