EA Issues Profit Warning

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In a conference call to analysts yesterday, Electronic Arts Chief Financial Officer (CFO) Warren Jenson revealed that the company was significantly lowering both its revenue and profit forecasts for the current fiscal quarter. The news immediately sent the company's stock downward by nearly $2 per share.

The EA executives participating in the conference call cited several contributing factors to these revised estimates including:

- an overall weak market for current generation game titles

- the limiting of the installed user base for the Xbox 360 due to the console's supply issues

- consumer perceptions that the PlayStation 3 may be launching in Spring 2006, noting that it's "causing some people to stay on the sidelines"

- lack of a price drop for the PlayStation 2

In response to analyst queries, Jenson stated that he believes overall sales for the entire game market for 2005 would be "somewhere between negative 5 percent and negative 10 percent compared to 2004 in North America, and somewhere between flat and negative 5 percent in Europe", a significant downward revision from previous estimates.