Electronic Arts Inc forecast fiscal 2014 earnings above Wall Street's expectations as cost cuts take hold and higher-margin digital sales accelerate, lifting the video game publisher's stock 9 percent.
Electronic Arts, which like the rest of the industry is struggling as players migrate to more casual games such as Angry Birds on mobile devices, estimated fiscal 2014 profit, excluding certain items, of $1.20 a share, beating an average estimate of $1.10.
Shares of Electronic Arts rose to $20 in after-hours trading on Tuesday after closing at $18.41 on Nasdaq.
Digital revenue rose 45 percent year-over-year to $618 million, larger than EA's packaged goods business in the quarter ended on March 31.
EA has been cutting staff and reorganizing studios in recent months to embrace new game platforms, cut costs and adapt to tougher market conditions. The publisher is preparing to adopt the next-generation video game console technology in its games.
Consumers have held back from buying hardware and software as they await new versions of Sony Corp's PlayStation and Microsoft Corp's Xbox expected later this year.
For fiscal 2014, the video game maker forecast revenue of $4 billion, in line with Wall Street's expectations, according to Thomson-Reuters I/B/E/S.
For the latest quarter, total revenue declined to $1.2 billion from $1.37 billion a year ago. Adjusted revenue rose 6.4 percent to $1.04 billion from a year ago, barely beating analysts' average estimate of $1.03 billion according to Thomson-Reuters I/B/E/S.
Net income fell to $323 million, or $1.05 per share, from $400 million, or $1.20 per share, a year ago.
Weakness in the packaged games market dented revenue, but EA recognized $120 million of deferred payments from its shooter Battlefield Premium game service in the fourth quarter, Chief Financial Officer Blake Jorgensen said.