EA Hints At Mass Studio Layoffs To Their Debt Investors

EA Hints At Mass Studio Layoffs To Their Debt Investors

By Jovan 2 2 min read
Electronic Arts
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Day 1 under new ownership is looking as predicted.

EA plans to cut more than half a billion dollars in yearly operational costs under the new ownership. The official Press Release from Andrew Wilson on the topic of EA buyout only included, well, PR talk. Including a public message for the press and a private message for their employees - made public.

What hasn't been stated publicly and was shared only to investors is the upcoming plan to cut $700 million in annual costs. Including $170 million in "organizational efficiencies". Professional gaming reporter for Bloomberg Jason Schreier described it as another way of saying "mass layoffs".

Read Jason's full statement below:

EA officially goes private tonight, meaning:

  • EA will no longer trade on the NASDAQ for the first time in 36 years
  • All stockholders of EA (including many employees) will receive $210/share
  • EA will take on $18 billion (!) in debt, putting it on the hook to pay ~$1.8 billion/year in interest

EA's annual Ebitda is around $1.5 billion, which should be enough to service the interest payments. But the publisher has told debt investors that it will cut $700 million in annual costs including $170 million in "organizational efficiencies," per Bloomberg. In other words: mass layoffs

Source

We know that EA is eager to add AI to their employees day-to-day workflow. But as suspected with the initial reports and analysis of how this buyout is going to go, there will be layoffs. If $170 million of relief in organizational efficiencies include the reported mass layoffs, we're looking at around a thousand jobs lost.

And that's included in the full $700 million annual cost sum, out of which $530 million yet have to be specified and revealed as the time moves on.


We'll keep you updated as the story further develops on the post-buyout future of Electronic Arts. EA News is the main cornerstone for all buyout news, reports and stories.


2 Comments

  1. MsMoBear

    $1.8 billion in annual interest with only $1.5 billion in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization aka cash-generation from operations with specific cost exclusions) explains why these cuts are so deep. They don’t have sufficient earnings to cover the debt cleanly, so they’ll have to trim a lot of financial fat to service their debt. This might include IP sales as well.

    Wish I could say this is a surprise, but I’m not. Leveraged buyouts typically come with debt for the company being bought out. All so an wealth investment fund and two private equity firms can get a little richer.

  2. XnixnBvg

    Disgusting. Honestly, I expected nothing more from this company. Was the greed worth it? Because now you sold yourself to the devils.

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