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EA: Sony said PS3 sales were only half as expected



By Reuters

NEW YORK (Reuters) - Electronic Arts Inc. CEO Larry Probst said on Wednesday that initial sales of Sony Corp.'s new PlayStation 3 were half of what the console giant had targeted, due to shortages

Probst's remarks pushed down EA's shares by nearly 2 percent, even though he said sales of video games and players were at or slightly ahead of targets at the start of the holiday season.

The chief executive of the world's biggest video game publisher said demand for the much-anticipated PlayStation 3 (PS3), which made its U.S. debut on November 17, was strong, but a shortage of supply meant that only about 200,000 units of the game console were sold at retail outlets.

Sony had originally aimed to ship 400,000 PS3 units for its U.S. launch, and has not given actual figures.

Probst told the Reuters Media Summit in New York that EA had set a lower bar for initial PS3 shipments, but "where they ended up was a bit of a surprise."

By the end of 2006, he expects Sony to ship 500,000 to 800,000 units in the United States.

"We think they'll get into that range," said Probst, who noted that console sales and corresponding game sales were typically slow to begin with because of supply constraints, and a clear winner will not be known for as long as five years.

Large crowds had camped out for days ahead of the PS3's U.S. debut. Supplies were scarce, and Probst said some 20,000 owners were able to flip their new machines on Web auction site eBay Inc. for, on average, more than double the $600 price.

HOLIDAY RUSH

This holiday season is crucial for the $30 billion global video game industry as U.S. game makers reap more than half of their annual sales during this period.

Game makers are also at the tail end of a rocky 18-month transition to new console technology since the arrival of the PS3 and Nintendo Co. Ltd.'s Wii consoles earlier this month. Those machines compete with Microsoft Corp.'s Xbox 360, which hit stores a little over a year ago.

EA, whose titles include football game "Madden" and "The Sims," recently raised its 2006 outlook to call for flat to 5 percent growth in overall U.S. game sales. Previously, it expected overall sales to be flat to down 5 percent in 2006.

"That's a much more optimistic outlook for the year than people were previously expecting," Probst said.

"Bottom line, I would say that the first holiday weekend met or slightly exceeded expectations," he added, citing solid sales of the Xbox 360 and Wii, Sony's legacy PlayStation 2, as well as the PlayStation Portable (PSP) and Nintendo's DS handheld devices.

Nintendo has reported sales of 600,000 Wii consoles in the eight days after its release on November 19—and that Wii-related revenue including games and accessories had hit $190 million.

"Clearly the Nintendo Wii had a spectacular holiday," said Probst, adding that Wii sales came in ahead of EA's forecasts.

Microsoft looks to be on schedule to hit its target of shipping 10 million units Xbox 360 units by year end, Probst said. Microsoft and Nintendo each hope to chip away at Sony's lead in this console war.

EA's shares fell 1.8 percent to $56.19 after Probst's comments, before recovering a bit to close at $56.77, still down 0.8 percent on the Nasdaq.

Shares in Activision Inc., the No.2 U.S. game maker, which has a smaller exposure to the PS3, fell 0.6 percent before rebounding to close up almost 2 percent at $16.58.

Separately, EA Chief Financial Officer Warren Jenson said at an investor conference in Arizona that the game "Superman," an important holiday title that released after the film, was a disappointment and sales would fall short of company targets.

Analysts said Jenson's comments also weighed on EA's stock. -pcmag

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