Electronic Arts Inc. shares took a hit the day after the video game publisher said it is cutting 1,500 jobs. EA, based in Redwood City, Calif., said the job cuts, representing about 17 percent of its workforce, are expected to save about $100 million a year.
EA also said it bought Playfish Inc., a London-based maker of online social games, for $275 million in cash. It will also pay up to $100 million if Playfish hits certain financial targets by the end of 2011, plus $25 million in stock-based retention agreements with Playfish employees. Digitally distributed games are a relatively small but rapidly growing business for EA and the broader industry.
“The reality is that EA remains a company in transition,’’ wrote Broadpoint AmTech analyst Benjamin Schachter in a note. “As it tries to figure out how to right-size itself and execute, the timing and the form of the transition to digital are still unclear.’’
