Electronic Arts 2008 Annual Report Download - page 98

The majority of our sales are made to a relatively small number of key customers. If these customers
reduce their purchases of our products or become unable to pay for them, our business could be harmed.
In our fiscal year ended March 31, 2008, over 73 percent of our U.S. sales were made to seven key customers.
In Europe, our top ten customers accounted for approximately 32 percent of our sales in that territory during
the year ended March 31, 2008. Worldwide, we had direct sales to two customers, GameStop Corp. and Wal-
Mart Stores, which represented approximately 13 percent and 12 percent, respectively, of total net revenue in
the year ended March 31, 2008. Though our products are available to consumers through a variety of retailers,
the concentration of our sales in one, or a few, large customers could lead to a short-term disruption in our
sales if one or more of these customers significantly reduced their purchases or ceased to carry our products,
and could make us more vulnerable to collection risk if one or more of these large customers became unable
to pay for our products. Additionally, our receivables from these large customers increase significantly in the
December quarter as they stock up for the holiday selling season. Also, having such a large portion of our
total net revenue concentrated in a few customers could reduce our negotiating leverage with these customers.
Our products are subject to the threat of piracy and unauthorized copying, which could negatively
impact our growth and future profitability.
Software piracy is a persistent problem, particularly in countries where laws are less protective of intellectual
property rights. The global expansion of organized pirate operations, the proliferation of technology designed
to circumvent the protection measures we use in our products, the availability of broadband access to the
Internet and the ability to download pirated copies of our games from various Internet sites and through peer-
to-peer channels, and the widespread proliferation of Internet cafes using pirated copies of our products, all
have contributed to ongoing and expanding piracy. Though we take legal and technical steps to make the
unauthorized copying and distribution of our products more difficult, as do the manufacturers of consoles on
which our games are played, these efforts may not be successful in controlling the piracy of our products.
These factors could have a negative effect on our growth and profitability in the future.
Our stock price has been volatile and may continue to fluctuate significantly.
The market price of our common stock historically has been, and we expect will continue to be, subject to
significant fluctuations. These fluctuations may be due to factors specific to us (including those discussed in
the risk factors above as well as others not currently known to us or that we currently do not believe are
material), to changes in securities analysts’ earnings estimates or ratings, to our results or future financial
guidance falling below our expectations and analysts’ and investors’ expectations, to factors affecting the
entertainment, computer, software, Internet, media or electronics industries, to our ability to successfully
integrate any acquisitions we may make, or to national or international economic conditions.
Item 1B: Unresolved Staff Comments
None.
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