Restructuring - Electronic Arts

Electronic Arts (EA), one of the largest companies in the gaming industry announced recently that it is undertaking a restructuring effort in an attempt to achieve higher profitability. In a recent investor's call, EA's CFO, Blake Jorgensen relayed that operating expenses for 1st quarter 2013 were $540 million, $15 million higher than expected. Blame for this was placed on $16 million being spent on severance for laid-off employees and the recently resigned CEO, John Riccitello. During the call, the company confirmed that it had laid-off about 900 workers, roughly 10% of its workforce as part of the process (Electronic Arts, 2013). This is the most recent round in what some have seen as a pattern of layoffs over the past couple of years. In 2012, EA cut its workforce by 5-10%, with around 800 employees getting the axe between 2010 and 2011 (Cowan, 2013). In addition to the layoffs, the company has also shut down its EA Partners Program, a service providing publishing contracts for indie studios, and closed its Montreal-based mobile development studios as well (Corriea, 2013).

To determine the success of failure of EA's restructuring, one will need to look at more than just the financial numbers. EA has had quite a bit of bad publicity as of late. The company experienced severe server problems with its recent SimCity release, causing many who purchase the game to not be able to play the game. It was also recently awarded, for the second year in a row, the worst company in America by readers of The Consumerist, receiving around 78% of the vote (Morran, 2013). In response to this, the COO, Peter Moore, while accepting some responsibility on the part of EA, seemed to place at least some of the blame on a conspiracy by conservative web sites protesting the inclusion of LGBT characters in games (Moore, 2013). In a recent informal poll by Glassdoor.com, employees rated the company 3.3 out of 5, citing week support functions and hard-to-fix