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EA's CFO resigns amid bid for Take-Two

By Scott Hillis Mon Mar 24, 3:34 PM ET

SAN FRANCISCO (Reuters) - Electronic Arts Inc (ERTS.O) said on Monday that Chief Financial Officer Warren Jenson will leave the video game publisher, which is pursuing a hostile takeover of rival Take-Two Interactive Software Inc (TTWO.O). ADVERTISEMENT

Electronic Arts did not give a reason for his departure, but said Jenson will stay to help the company close its fiscal year, which ends March 31, and could remain through September to ensure a smooth transition.

A replacement will be named shortly, it said.

Jenson said in a statement that it was "time for me to write the next chapter in my career" but the sudden departure raised concerns among some analysts, given other recent management changes, the pending offer for Take-Two and the upcoming end of EA's fiscal year.

"Had the replacement been a smooth, well-telegraphed transition, the Street may have viewed it more positively," UBS analyst Ben Schachter wrote in a note. "However, we think the unexpected timing will raise eyebrows and the company's risk profile."

Investors appeared little concerned as EA's shares rose 2.7 percent to $49.80 on the Nasdaq, amid a broader market surge that saw the Nasdaq rise 3.3 percent.

EA, earlier this month, took its $2 billion all cash bid for Take-Two directly to stockholders. Take-Two has resisted the bid, saying it does not account for expectations of a blockbuster debut for its criminal action game "Grand Theft Auto 4" on April 29.

"I can say very concretely that Warren is highly supportive of EA's efforts around Take-Two and is very much aligned with (Chief Executive) John Riccitiello," said Electronic Arts spokeswoman Holly Rockwood.

Jenson's departure follows other EA management changes, most recently the appointment of John Pleasants as new chief operating officer last week.

Riccitiello, who returned to head EA about a year ago, reorganized the company into four divisions and hired well-regarded outsiders, including Peter Moore, former head of Microsoft Corp's (MSFT.O) Xbox effort, and Kathy Vrabeck, who previously worked for rival Activision Inc (ATVI.O).

"It seems to me he's moved in a completely new management team across the board," said Kaufman Bros. analyst Todd Mitchell. "I wouldn't be surprised if it's just a move to get his own people in."

Jenson, who was CFO at Web retailer Amazon.com Inc before joining EA in 2002 and helped shepherd the company through a U.S. regulatory probe of stock option grant accounting, an inquiry that ended in November with no action taken.

Wedbush Morgan analyst Michael Pachter said EA's stock, which has fallen 1 percent over the past year compared to a rise of nearly 47 percent in Activision's, could benefit from a more outgoing CFO to pitch the company's story to investors.

"The share price is (a) function of supply and demand for the stock. Supply is constant so anything you do to increase demand for your shares makes the price go up, period," Pachter said.

"This is something EA hasn't done a very good job with. If they have a good story, they are going to increase demand by telling everybody. It's Econ 101 but for some reason it hasn't resonated at EA," Pachter said.

(Additional reporting by Michele Gershberg in New York, editing by Dave Zimmerman, Leslie Gevirtz)