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Console shortage causes sales slide for EA

Blaming slow Xbox 360 sales and anticipation of a spring PS3 release, Electronic Arts announced today that its earnings will be well below projections for this financial quarter.

Of the two reasons, the console shortage is the biggest problem — and one analyst tells Reuters that it may take years to recover, especially if PS3 isn’t out in large quantities by next holiday season.

“There are 5 million people who really believe they are getting an Xbox 360 relatively soon, by February. Microsoft has shipped 500,000 units, so 4.5 million people are doing nothing. That’s enough to just kill Christmas,” said Michael Pachter, an analyst with Wedbush Morgan Securities.

Meanwhile, EA’s CEO says that some gamers are holding off on purchasing current-generation games in anticipation of the PS3’s release.

“There are rumors that the PlayStation 3 may launch as early as spring, and that’s causing some people to evaluate whether to make a purchase now or wait,” CEO Larry Probst told a conference call.

So, the bottom line? Production failures are really hurting game developers, and anticipation of the new PS3 — or finally getting a 360 — is keeping people from spending money now. If Sony wants to bail out its developers, it needs to do to two things:

  • Decide on a release date, so gamers know how long they’ll have to wait.
  • Figure out how to produce enough PS3s to at least avoid a massive shortage — and give developers and store owners realistic estimates of how many systems will be there at launch.

• EA warns on Xbox shortages [Reuters, CNN/Money]

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