To put in a different way what's already been said, it makes perfect sense if you look at it this way:

2006: PS2 is dominant, most investment on PS2 = $242 million profit
2007: Transitional year, most investment on PS360 = $72 million profit
2008: Wii is dominant, most investment on PS360 = $454 million loss

EA bet on the wrong horse(s), as did almost every other third party developer, by throwing their weight behind two systems with development costs that are so high that they will return record losses at the same time as record revenues. As long as they are unable/unwilling (which is reality is a whole other topic in itself) to make any serious efforts to pursue the half of the entire console market that's gone over to the Wii, they're looking at another three or four years of this.

A look at big businesses show that those who focus on profitability, instead of marketshare, tend to do the best. There are exceptions of course, but EA seems to support this analysis. EA keeps growing and acquiring, but there's so much overhead now that they can put out 10+ blockbusters a year and still end up half a billion in the hole. If they trimmed extraneous development teams, focused only on the most promising new IPs and steady earners, they'd be a bit smaller, but their profits would skyrocket.

They ar just badly organised. Too expensive games, too little profits.

They also lost quite a lot with their sudden burst of "innovation and creativity". Of course their sequel milking wasn't good either, but making hardcore niche games for high metacritic ratings only, (Dead Space, Mirror's Edge) was the wrong reaction.

Many MMOs have their number of subscriptions go down soon after the release, but that doesn't mean it's a flop. Even though alot of servers were closed, that doesn't mean it's a flop. Warhammer Online has 300k people, which is more than enough to make some big bucks, probably more than Mass Effect 2 will. MMOs keep making money for years.

As for Spore, it went as expected by EA, atleast according to their financial report. I don't think anyone ever expected to reach the levels of The Sims.

It has already go down to a third of its peak subsubcribers (and still shrinking I'd wager) and lost 3/4s of their servers for NA. The game is floundering badly. Once the negative trend hits there is no saving a MMO. Shrinking never reverses itself. The game is dying, and rather rapidly from the looks of it. Total flop. If you knew anything about the MMO market you would understand that much.

Tell that to Age of Conan, which most thought it was a much bigger flop than Warhammer Online, and now is increasing it's subscriptions.

Source? All the anecdotal evidence I have seen says the game is dying a painful death. I know more than a few people expecting someone to pull the plug on the game.

http://www.eurogamer.net/articles/age-of-conan-turns-corner-says-funcom

"In Funcom's latest financial report, there's some encouraging news regarding the performance of its troubled MMO Age of Conan - although nothing as concrete as subscriber numbers.

The report for the first quarter of 2009 says that the fantasy MMO's subscriber retention has improved and "a significant increase in new customers in Q1 compared to Q4 has led to a stable and solid subscriber base". Players are spending longer in the game on average, too.

The company reported earnings of USD 7.7m, largely from Age of Conan subscriptions. That's actually a dip from the USD 8.7m it made in the last quarter of 2008. But the painful USD 23m losses of that period have been replaced by a modest USD 1.5m operating profit."

@ Shio. I don't know about WarHAmmer, but I wont sit tigh and watch someone saying Spore was a success in my watch. That DRM PoS was my biggest disapointment in gamming in a long time. I'm still hoping they come out and say "Kidding, here's the real deal". EDIT: Just to clarify my point, if they made a half decent game instead of that turd, they would be sitting in a new awesome Franchise, plus innovating the industry and maybe revitalizing PC gaming in the eyes of the gamming community, that despite PC excellent offering, now considers pc gaming sceond rate to console gamming(when I say now, I mean since mid 2000's, when PS2 became mainstream)

@ OP: I didn't look at the financial report, but probably they made some investments recently that are showing in the financial results. My opinion is that someone made big mistakes recently in regards with future sales and marketing effectiveness.