EA Tightening the Belt, Hiring Fewer Staff – Lazard

According to the latest note from Lazard Capital Markets analyst Colin Sebastian, leading publisher Electronic Arts is looking more closely at controlling expenses in an effort to improve efficiency, and as part of that process it seems that hiring of new employees has slowed all the way down.

"Based on our analysis of job requisitions on EA websites, we believe the company has recently curtailed new hiring, which we believe is likely one part of a broader initiative to control expenses. We note that management has previously highlighted internal efforts to improve operating efficiency; however, it is encouraging to see some evidence of the process in action," Sebastian commented.

Overall, Sebastian appears to be bullish on EA. "We continue to believe that EA's product pipeline this year is an improvement over the past several years, despite the ongoing risk of title pushouts, while a combination of solid sales of new franchises (e.g., Spore, Warhammer, Mirror's Edge) along with tighter expense controls would provide better visibility for our F2009 estimates as well as the company's longer-term financial goals," he said.

Sebastian is maintaining a "Buy" rating on EA's stock and a $55 price target.

He also is in agreement with UBS analyst Ben Schachter, who recently said that Madden 09 sales were essentially flat with last year. "Our preliminary retail channel checks over the last two days indicate that sales of key EA franchise Madden NFL 09 are roughly flat on a unit basis compared with last year, and are tracking slightly higher on a dollar basis factoring in a higher average selling price (ASP) and 20th anniversary collector's edition," Sebastian said. He expects unit sales of the new Madden to remain flat for the year.