Yet, people often take it that way if they don’t know better — including people close to home. “My mom took it that way,” Riccitiello said. “I straightened her out over Thanksgiving.”
Electronic Arts, publisher of franchises such as “FIFA Soccer” and “Medal of Honor”, has lost ground in the industry with the rise of games played on mobile phones and social networks such as Facebook. The company’s stock is down 74 percent over the last three years on the Nasdaq Stock Market, giving it a $4.98 billion valuation.
“I need to finish engineering and building to make that happen,” Riccitiello said. “I don’t need a billion-dollar acquisition.”
Electronic Arts fell 24 cents to $14.77 at 9:47 a.m. The stock had lost 15 percent this year before today. Activision Blizzard Inc. is the largest U.S. video-game publisher.
Restructuring: You shouldn’t be afraid to do it, even more than once if you have to, and even if your own family doesn’t understand it. Just ask John Riccitiello, chief executive of videogame publisher Electronic Arts. Here’s what he said at the Reuters Global Media Summit on Tuesday:
Electronic Arts bought Playfish, the second-largest maker of games on Facebook, for as much as $400 million, and acquired Chillingo, the U.K.-based publisher of “Angry Birds,” last month to add titles made for Apple Inc.’s iPhone and iPad.
That means taking the big net loss at times, even though as Riccitiello stressed, that was on a “GAAP” basis. That means the bottom line. Still, media businesses tend to look at profit before various charges (often expressed as operating profit or other terms that are comparable to Wall Street analysts’ expectations and are said to offer a true picture of a media business’s health), and executives sometimes get irritated when you insist on reporting their bottom line performance. Why? Because a massive loss from a writedown or a restructuring shows up in the bottom line, but it is not always a sign of the business’s fundamental health.
“Zynga has a chance that ‘Farmville’ will stand the test of time successfully, but it’s far from clear to me that that’s a certainty,” he said.
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A company that doesn’t restructure in the face of that dramatic transformation, I don’t know what they’re doing. GM had a great decade in the ’70s building large cars… They didn’t restructure in the face of what was obvious. The music industry kept telling us they wanted to buy albums, and then they tried to sue us. It didn’t serve them well. … We look at the future and we are aggressively embracing it… .
Electronic Arts distributes Rock Band, which is made by Viacom Inc.’s Harmonix studio. Viacom said earlier this month that it plans to sell the unprofitable unit.
“I’m sure some smart investor will buy the business feeling that they can catch a falling knife,” he said, “but more people have been cut trying to catch falling knives than have benefitted from getting the timing exactly right.”
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