Economic burnout hits EA

540 jobs to be cut on news that EA lost a surprising $310 million last quarter despite strong sales.

Nearly 540 EA employees will lose their job over the course of the next few weeks after Electronic Arts revealed a surprising $310 million dollar loss during the July-September. The upsetting news could be the start of a difficult season not just for EA, but for the gaming as a whole.

The news, which comes during the middle of the worst economic period in the US since the 1920s, directly conflicts with some analyst claims that the gaming industry is recession proof. CEO John Riccitello admits, "Considering the slow down at retail we've seen in October, we are cautious in the short term."

Economic burnout hits EA

Economic burnout is far from paradise.

Sony Computer Entertainment chief executive Kaz Hirai shares Riccitello's cautious outlook. "I wouldn't go so far as to say we're recession-proof," Hirai states in an interview with the Wall Street Journal, "But we expect to be hit much less than an auto company, for example."

EA's troubles point to a rocky economy given that a number of its titles released in the last six months have sold quite well. Spore has sold over 2 million copies, Madden NFL 08 did more than twice that with 4.5 million. Tiger Woods PGA Tour 08, NCAA Football 08, and even Mercenaries 2: World in Flames moved shy of 2 million copies according to EA financial reports.

Despite solid sales, EA is hemorrhaging money. Increasing costs due to the economic crunch are catching up with EA--who's it going to hit next?

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BigBangA1

While the economy is bad right now, it is not as bad as it was in the 1920's. The Savings and Loan Crisis of the 1980's was actually the closest we ever got to going into another depression. On several days during that crisis the Stock Market nearly had a total collapse. While I'm not saying the current situation is not bad, which in all honesty it is, it is sad to see it very sad to see this industry struggling.

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VictoryRed

Yet some continue to insist that there is no recession.

*sigh*

I feel sorry for the chump elected tomorrow, they'll have their hands full come January.

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