Video games giant to axe 500 jobs

EA posted a profits warning, despite a 40% rise in sales

Video game publishing giant Electronic Arts (EA) is to shed more than 500 jobs, after the firm announced lower than expected profits for the year.

Nearly 20% of its share value was wiped out after the profit warning, with its shares closing at $22.78.

EA said that higher development and marketing costs, as well as delays to the latest Harry Potter video game, were to blame.

However, this was offset by the success of titles such as Spore and NFL 09.

We are very bullish on the game sector overall

John Riccitiello, EA chief executive

With the majority of game sales taking place in the run up to Christmas, EA's chief financial officer Eric Brown sounded a note of caution.

"We have heard that retailer foot traffic is down in general," he said.

EA said the job cuts, which amount to nearly 6% of its work force, would be spread across all functions and locations, and it did not rule out compulsory redundancies.

"Considering the slowdown at retail we've seen in October, we are cautious in the short term," said John Riccitiello, EA's chief executive.

"Longer term, we are very bullish on the game sector overall and on EA in particular."