Electronic Arts began laying off approximately 5% of its workforce this week as a result of a poor third quarter for the video game giant. Around 140 employees at its Redwood City headquarters were reportedly let go, and about 200 more pink slips are expected to be handed out in the U.S. and Canada.
EA, which just extended its multi-million-dollar contract with pro golfer Tiger Woods, is dismissing artists and programmers in order to reduce costs. The company blames the industry-wide game sales slump for its 31% decline in profits for the quarter. It’s believed that gamers are saving their money for next-gen consoles and games rather than buying new titles for the soon-to-be-replaced PlayStation 2, Xbox and Game Cube units.
Though top EA titles Need for Speed Most Wanted, FIFA 06, Harry Potter and the Goblet of Fire, The Sims 2 and Madden NFL 06 all sold more than two million copies, the company’s net revenue is down 11% at $1.270 billion, compared to $1.428 billion for the fiscal quarter ended Dec. 31, 2004.
This week, EA entered into a definitive merger agreement with mobile technology company JAMDAT. Under the deal, EA will pay $27 per share in cash in exchange for each share of JAMDAT common stock.
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