Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Industry In The News Date: Tue, 27 Oct 92 16:00:26 EST Message-ID: <2.1992Oct27.160026@AmeriCast.com> 10/27/92 TITLE Industry In The News #m#gm#m##m#Photo Larry Probst#m#Electronic Arts Scores Steady Wins In Home Video Games John A. Jones Since it entered the broad home video game market in 1990, Electronic Arts Inc. has more than doubled its revenue and earnings, getting a solid lock on the expanding market for 16-bit games. Electronic Arts, based in San Mateo, Calif., has been in business for 10 years as a creator and distributor of in- teractive entertainment software. Its first products were designed for personal computers, but later offerings run on home video game systems. Investor's Business Daily, Computer - Software ranks 21st, based on six-month stock- price performance with added weight given to recent months. In this series, leading companies within the group are reviewed. Last year, nearly all Electronic Arts products were developed for 16-bit platforms, including the latest 16-bit Sega Genesis and Super Nintendo video game systems, which offer more lifelike animation than earlier home systems. Markets Other Publishers' Games Last spring, the company was marketing about 90 game titles of its own creation and over 170 more titles from other software publishers. In the first half of its current year, Electronic Arts released nine new Genesis and Super Nintendo video game ti- tles and 10 new games for IBM computers. Earnings for the fiscal second quarter ended Sept. 30 rose 57% to 22 cents a share from 14 cents a year earlier. Net income was up 64% to $5.23 million from $3.19 million. Revenue rose 54% to $54.6 million from $35.4 million. Electronic Arts' stock fell sharply yesterday on news the stock was removed from a brokerage's recommeded list. Two weeks earlier, it plunged to 301/2 from 35 after the company re- ported second-quarter earnings. For the fiscal year ended March 31, Electronic Arts earned 73 cents a share, up 74% from 42 cents a year earlier. Net income was up 79% to $15.7 million from $8.73 million. Revenue rose 56% to $162.1 million from $104.2 million. In September, Electronic Arts completed its acquisition of Origin Systems Inc., a publisher of high- end entertainment software, in a stock swap transaction valued at about $35 million. The deal added $929,000 to net income in the six months ended Sept. 30. The company also formed a joint venture in Japan with the Victor Musical Industries subsidiary of JVC. Electronic Arts Victor's missions are to convert Electronic Arts' library of products to Japanese language and distribute them in Japan, and to create original titles for worldwide markets. The venture's initial capital was about $10 million, and Electronic Arts will own 65%. It's expected to have sales of $8 to $10 million in the next 12 months. Electronic Arts now gets about a third of its sales from abroad. Larry Probst President and Chief Executive Larry Probst reported the market for Sega Genesis and Super NES software continues to grow in North America as hardware prices come down. Probst joined the company in 1984 as vice president of sales, and has been CEO since January 1991. "In Europe, the growth of the Sega Mega- Drive (Genesis) has been truly outstanding and we have been par- ticularly well-positioned with our large catalogue of Genesis ti- tles," Probst said. "The acquisition of Origin is an excellent strategic fit," he ad- ded. "It comes with two of the most successful product lines and some of the most creative talent in the industry, and puts us im- mediately in the CD ROM market." Under a worldwide licensing agreement signed with Sega Enterprises Ltd. last July, Electronic Arts will publish software for the new Sega CD to be introduced in the U.S. in November, as well as game cartridges for Genesis. Improves Sound, Graphics The Sega CD is a peripheral device for the Sega Genesis game machine, adding the advantages of improved video sound and enhanced graphics available through compact disc technology. Electronic Arts has been a licensed developer and publisher of video game cartridges for the Sega Genesis system since June 1990, and has become the leading independent third-party publish- er of titles for that system. Analysts said Electronic Arts has built a strong position in the growing 16-bit game market. They said the worldwide business will become harder for new competi- tors to enter as the games become more sophisticated and techni- cally demanding while retailers put more pressure on prices. "They have an excellent position in the Sega Genesis segment," said Robert F. Kleiber of Piper Jaffray Inc. in Minneapolis. It's a little early to judge how the CD business will turn out, Kleiber said, "but if it's typical of their other efforts, they'll execute it well." Meanwhile, sales of the 16-bit games are still growing at a double-digit pace, as the new generation of products expands its overall market share. Wednesday: Cerner Corp. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM