EA To Lay Off About 1,000 Workers, A 10% Cut In Overall Workforce
Electronic Arts Friday announced in an SEC filing plans to lay off about 1,000 employees, a 10% reduction of the company’s overall workforce and an expansion of the previously planned 6% cutback announced in October. At least nine studios will be closed or consolidated. No specifics were outlined relative to the EA Sports division, but EA VP/Corporate Communications Jeff Brown said the move "will impact all divisions and all geographies worldwide, and sports certainly falls into that." The cutbacks are expected to be complete by the end of the company's fiscal year on March 31. EA announced earlier this month it would miss its fiscal year-end revenue target of $5.0-5.3B, with analysts expecting the figure to come in around $4.7B due to disappointing holiday sales. The staff reductions, according to the SEC filing, are projected to produce $120M in annual cost savings. EA also said in the filing it "is implementing a plan to narrow its product portfolio focus on hit games with higher margin opportunities" (Eric Fisher, SportsBusiness Journal).
GAME STOP: The GLOBE & MAIL's Matt Hartley reported the announcement comes just one week after EA said that it was "shelving plans to open a new, 20,000-square-foot facility in Vancouver's trendy Yaletown district due to slow holiday sales in Europe and North America as a result of the sagging global economy." Although EA said that the studio consolidations and layoffs "will produce annual savings of about" $120M, analysts "worry that it might not be enough to revitalize the sputtering game producer as it battles rising costs and skittish consumers." Wedbush Morgan Securities analyst Michael Pachter said EA "needs to stop investing in things that are speculative and don't have a proven business model" (GLOBE & MAIL, 12/20).
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