Yahoo Finance UPDATE 2-Electronic Arts forecasts annual bookings below estimates as gamers cut spending
(Recast lede, adds background in paragraph 5)
May 7 (Reuters) -
Video game publisher Electronic Arts 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 Redwood City, California-based company's shares fell 3.4% in extended trading. EA also authorized a new three-year stock buyback plan totaling $5 billion.
The dour forecast from EA, one of the biggest names in gaming, 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 and "Grand Theft Auto" maker Take-Two Interactive, have been aggressively cutting costs in recent months to combat the economic uncertainty and slumping game demand.
Growth in personal computing and console gaming is expected to remain below pre-pandemic levels as gamers record fewer hours of playtime owing to weaker release schedules, data from research firm Newzoo showed.
Analysts from Roth MKM had warned about the company's outlook in a research note last week citing a lack of visibility into EA's development pipeline and lighter release schedule.
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.
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)
