EA’s CEO John Riccitiello has just submitted his letter of resignation to the company’s board. He’s stepping down on March 30 and Larry Probst is stepping in as Executive Chairman. Probst will lead the hunt for a permanent CEO. The company announced the changes shortly after markets closed in New York and EA’s shares are up 2.1 percent in after-hours trading.
He said in a personal statement from the company that he’s resigning over EA’s poor financial performance this quarter. The company suffered a big black eye over the last few weeks with the botched launch of Sim City, which left paying fans frustrated over the performance of the game.
“My decision to leave EA is really all about my accountability for the shortcomings in our financial results this year,” he said. “It currently looks like we will come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago. And for that, I am 100 percent accountable.”
EA said in the release announcing his resignation that its revenues and earnings per share for the current quarter will be at the “low end” of the guidance it gave last month. The company said its net revenue would come in this quarter at between $1.115 to $1.215 billion.
The Sim City game wasn’t the straw that broke the camel’s back though. “No one was dying internally about it,” says a source who worked closely with Riccitiello. “It was the most successful Sim City ever. It was more that there have been five years of soft quarters and missed opportunities.” EA said today that Sim City sold 1.1 million units sold through its first two weeks.
Riccitiello has led EA since 2007 and through a dramatic transformation in the industry as the gaming world has moved from selling expensive console games on the shelves of big-box retailers to one in which mobile phones and tablets are fast-becoming a platform of choice for many developers. Riccitiello was hired into the role after he left EA to co-found and lead Elevation Partners.
Another source who worked closely with Riccitiello on shaping the company’s strategy over the last few years said, “The truth is that the game industry continues to pivot very rapidly. EA is in a good place but it requires a lot of energy and laser focus…. He’s been pivoting the company hard for many years, but the industry keeps pivoting faster.”
Mitch Lasky, a partner at Benchmark who sold early mobile gaming pioneer JAMDAT to EA for $680 million, pointed out on Twitter that EA declined to immediately promote chief operating officer Peter Moore or president of EA labels Frank Gibeau up as interim CEO.
It appears that the board is looking for fresh blood to lead the company. But it will be incredibly hard to find someone who both understands the diversity and breadth of EA’s businesses across consoles, mobile and social gaming platforms and simultaneously can see where the industry is heading.
Electronic Arts Announces Change in Executive Leadership
Larry Probst Appointed Executive Chairman, Effective Immediately
Company Updates 2013 Fiscal Outlook
REDWOOD CITY, Calif. – March 18, 2013 – Electronic Arts Inc. (NASDAQ: EA) today announced that John Riccitiello will step down as Chief Executive Officer and as a member of the Board of Directors, effective March 30. The Board has appointed Larry Probst as Executive Chairman to ensure a smooth transition and to lead EA’s executive team while the Board conducts a search for a permanent CEO. The Board will consider internal and external candidates with the assistance of a leading executive search firm.
Mr. Probst has played a leadership role at EA since 1991. In addition to serving as Chairman of the Board since 1994, he previously served as the Company’s CEO from 1991 to 2007. As CEO, Probst successfully grew the Company’s annual revenues from $175 million to approximately $3 billion, led EA into new platforms such as mobile, online and other emerging markets and expanded its international presence to more than 75 countries.
“We thank John for his contributions to EA since he was appointed CEO in 2007, especially the passion, dedication and energy he brought to the Company every single day,” said Mr. Probst. “John has worked hard to lead the Company through challenging transitions in our industry, and was instrumental in driving
our very significant growth in digital revenues. We appreciate John’s leadership and the many important strategic initiatives he has driven for the Company. We have mutually agreed that this is the right time for a leadership transition.”
On behalf of the Board, Lead Director Richard A. Simonson stated, “As we begin the CEO search, we are fortunate that Larry, who has a proven track record with our employees, partners and customers, has agreed to assume a day-to-day leadership role as Executive Chairman. He has 16 years of experience as CEO of EA and a deep understanding of the Company’s strategy, management team, business potential and industry trends.”
Mr. Riccitiello stated, “EA is an outstanding company with creative and talented employees, and it has been an honor to serve as the Company’s CEO. I am proud of what we have accomplished together, and after six years I feel it is the right time for me pass the baton and let new leadership take the Company into its next phase of innovation and growth. I remain very optimistic about EA’s future – there is a world class team driving the Company’s transition to the next generation of game consoles.”