Electronic Arts has announced its preliminary financial results for the second quarter ended September 30, 2007, and despite the fact that Madden NFL 08 sold 4.5 million copies, the publisher saw its sales dip 18 percent (year-over-year) to $640 million. Furthermore, net loss for the quarter totaled $195 million compared with net income of $22 million for the prior year. Gross profit was also down 45 percent to $245 million.

EA explained that part of the loss stems from the fact that the company "no longer charges for its service related to certain online-enabled packaged goods games." Apparently a $296 million increase in deferred net revenue will be recognized in future periods.

Along with the financial news, EA made a significant announcement about its reorganization related to the recent realignment into four distinct labels. The plan, approved on October 29, 2007 by EA's Board of Directors, will lead to a number of changes over the next two years including: "(a) closing certain facilities, including EA's facility in Chertsey, England, (b) relocating and/or eliminating certain job positions, (c) incurring costs in connection with lease and other contract terminations, and (d) incurring IT and consulting costs to assist in the reorganization of business support functions."

Ultimately, EA expects to incur total pre-tax charges of between $90 million and $110 million, most of which will be incurred in fiscal 2008. In addition, the plan is anticipated to yield annual pre-tax cost savings of approximately $25 million to $30 million.

Regarding the second quarter, EA had a number of highlights. In addition to Madden's top sales, FIFA 08 sold 2.9 million copies internationally, with sell-through at retail up double digits year-over-year; MySims sold over one million copies on the DS and Wii; NCAA Football 08 and Tiger Woods PGA Tour both sold over one million copies; and on the Wii EA had 12 percent share in North America and an estimated 13 percent in Europe, which the company said makes EA the number one third-party publisher on the platform year-to-date.

"Our strategic priorities on quality, innovation and managing cost are showing progress," said John Riccitiello, Chief Executive Officer. "Highly accessible new properties like Skate and MySims have broken through with consumers and EA Sports continues to deliver great experiences on every platform. We've also announced a restructuring as part of a plan to better align cost with revenues."

Looking ahead, EA provided guidance of net revenue between $1.325 and $1.575 billion for the third quarter ending December 31, and for the full year ending March 31, 2008 EA is expecting between $3.35 and $3.65 billion in net revenue, which is up $150 million from the company's previous guidance.

The publisher is very optimistic about its holiday sales performance. "We think this will be a great holiday season for consumers," said Warren Jenson, Chief Financial and Administrative Officer. "We plan to launch over ten titles including The Simpsons Game, Need for Speed Pro Street, Hellgate: London, Rock Band, NBA Live 08, SimCity Societies and Crysis."