Electronic
Arts' chief executive officer John Riccitiello has resigned after six
years at the helm of the video games publisher, saying he held himself
accountable for missed operational targets.
The
company behind the "Sims" and "Medal of Honor" franchises warned
investors that earnings in the current quarter will be at the low end
of, or slightly below, its previously issued forecasts.
Riccitiello
will step down from his post and leave the company's board on March 30,
after having overseen a near-two-thirds loss in the company's market
value since he became CEO in April 2007.
EA
and rivals like Activision Blizzard Inc have seen growth fall off
sharply as more gamers flock to free games on social networks or on
mobile devices. The biggest traditional games publishers have tried to
buy startups and invest in mobile platforms but face intense competition
from entrenched players like Rovio or Zynga.
"We
have fallen short of the internal operating plan we set one year ago,"
Riccitiello said in a resignation letter filed with the Securities and
Exchange Commission. "EA's shareholders and employees expect better and I
am accountable for the miss."
In January,
Electronic Arts slashed its fiscal 2013 earnings forecast after a
weaker-than-expected holiday quarter marked by disappointing sales of
its "Medal of Honor" title. It also forecast non-GAAP revenue for the
fourth quarter ending March 31 of about $1.025 billion to $1.125
billion.
EA's former CEO and chairman of the
board, Larry Probst, has been appointed as executive chairman as the
company begins its search for its next CEO, the company said.
The news of Riccitiello's exit did not come as a surprise, Mike Hickey, an analyst at National Alliance Capital Markets, said.
Whether
it has been the company's performance guidance, the loss of key
development talent or botched product launches, Riccitiello has had "a
track record of mis-executions," Hickey said.
"The
stock that has underperformed encapsulates all of the issues," Arvind
Bhatia, an analyst at Sterne Agee said. "And this most recent quarter
was the straw that broke the camel's back."
Under
Riccitiello's watch, the company grew its digital and mobile games
businesses. Analysts say the company's revenue from mobile games has
been a bright spot in recent quarters.
But the
company has had high-profile slip-ups in recent months. Its latest
installment of the popular city-building game "SimCity" - released
earlier this month - was marred by server glitches and angered gamers
who could not access the game for days.
New
game hardware could potentially boost sales in the troubled video game
sector, according to analysts. Consumers are holding back from buying
hardware and software as they wait for rumored next-generation versions
of Sony's PlayStation and Microsoft's Xbox, expected later this year.
"We
believe timing makes sense for a CEO transition at the end of the
fiscal year, and ahead of next generation console launches and a strong
second-half title lineup (Battlefield and EA Sports)," analyst Colin
Sebastian of RW Baird said in a note.
Electronic Arts' stock climbed 3.4 per cent to $19.35 in after-hours trade, from a close of $18.71 on the Nasdaq.
No comments:
Post a Comment