REDWOOD CITY -- With his company performing worse than expected, Electronic Arts (ERTS) CEO John Riccitiello fell on his sword.

Riccitiello, who presided over a rocky six-year period at the video game giant, is resigning from the Redwood City company effective March 30, EA announced Monday. He will be replaced in the interim by former CEO Larry Probst, whom EA named as its executive chairman.

In his resignation letter, which EA made public, Riccitiello noted that the company's results for its current period are likely to be at the low end or below the forecast the company issued in January. The results are likely also to fall short of the company's internal plan, he said.

Electronic Arts’ EA.O Chief Executive Officer John Riccitiello poses during E3, the Electronic Entertainment Expo, in Los Angeles in this June 8,
Electronic Arts' EA.O Chief Executive Officer John Riccitiello poses during E3, the Electronic Entertainment Expo, in Los Angeles in this June 8, 2011 file photo. Riccitiello has resigned, saying he was "accountable" for the company's missing operational targets. Riccitiello will step down from his post as CEO and member of the board of directors on March 30, the video game company said on March 18, 2013. REUTERS/Phil McCarten/Files

His resignation "all comes down to accountability," Riccitiello said in his letter. "EA's shareholders and employees expect better and I am accountable for the miss."

In a news release, EA said it expected both its sales and earnings to be at the low end or below its forecast. Neither the company nor Riccitiello explained the shortfall and neither gave an updated forecast.

In addition to resigning as CEO, Riccitiello is resigning as a member of EA's board. Probst, formerly EA's nonexecutive chairman, will oversee daily operations of the company. Probst was EA's CEO from 1991 to 2007, when he was replaced by Riccitiello.

EA said that it plans to search for a new permanent CEO.


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Riccitiello presided over EA during a turbulent time for the company and the video game industry as a whole. When he took the reins at the company, EA was reeling from making bad bets, underestimating the popularity of Nintendo's Wii console and overestimating the initial popularity of Microsoft's Xbox 360 and Sony's PlayStation 3. During his tenure, archrival Activision merged with Vivendi Games to supplant EA as the world's largest video game company. Meanwhile, the success of free and low-cost games for Facebook and mobile devices such as Apple's (AAPL) iPhone ate into the demand for the traditional $50 and $60 games EA specialized in.

"An incredible amount has changed" for the industry during Riccitiello's tenure, said Sean McGowan, a financial analyst with Needham, which hasn't done any investment banking for EA. "It's not like they got buried (by the changes), but it used to be EA and everybody else was a distant second."

Rather than driving the industry as it had in the past, EA found itself reacting to the broader changes, with Riccitiello changing strategy repeatedly. Early in his tenure, the company shifted its focus to the Wii, then later shifted back to focusing on Microsoft's and Sony's consoles. Riccitiello emphasized making "quality" games for PCs and consoles, but later focused on growing EA's digital business, buying up social gaming company PlayFish and mobile game developer PopCap.

The results were mixed. EA posted losses in four of the first five years that Riccitiello served as CEO, and had posted a loss through the first nine months of its current fiscal year. Although EA's stock has performed well over the last six months, it severely underperformed both Activision and the broader market during Riccitiello's tenure.

And the earnings miss was only the latest stumble for the company. Less than two weeks ago, EA's high-profile launch of a new "SimCity" game was marred by overloaded servers that prevented owners from authenticating and playing the game. Riccitiello also drove the company's investment in "Star Wars: The Old Republic," an ambitious -- and expensive -- effort to create a multiplayer online game that would rival Activision-Blizzard's "World of Warcraft." But it was a dud.

"With all the problems with the launch of "SimCity," and just the fact that it's been a very, very tough couple of years, I can understand why some stockholders and board members might have been frustrated," said Joe Spiegel, managing member of Dalek Capital, which has owned EA stock in the past but doesn't currently.

Indeed, investors reacted positively to the news of Riccitiello's departure. In after-hours trading following the announcement, EA's stock was up 47 cents, or 2.5 percent, to $19.18. Earlier in the day, the company's stock closed regular trading down 17 cents, or about 1 percent, to $18.71.

Contact Troy Wolverton at 408-840-4285. Follow him at Twitter.com/troywolv.