The layoffs have me confused more then anything else. Help?

Yeah, because a company will put an already-developed game at the top of their list of priorities over developing new titles before the upcoming summer & winter seasons.

http://www.ea.com/games#6

-Overstrike
-Warhammer Online
-Command & Conquer Tiberium Alliances
-Crysis 3
-New Sim City title
-Command & Conquer Generals 2
-Medal of Honor: Warfighter
-NHL 13
-Madden NFL 13
-The Sims 3 Diesel Stuff Pack
-NCAA Football 13
-EA SPORTS UEFA EURO 2012
-Tiger Woods PGA Tour 13

These are all rather large titles in the development pipeline for 2012, and have been since the March interview you're referring to. Considering that SWtOR already has a stable subscriber base and is out of the main development phase, I'm happy to see that they're including it in their "top 10" priorities considering what else they're planning to release. Remember, EA is a large company with multiple properties. You're not talking about SWtOR versus all the other RPGs or just Bioware's other products, but one of the largest publishers in the market. Keep that in mind.

Tell me then, as an investor, what does it typically mean when a company engages in a large buyback program of its own stock?

I have no interest in it and I noticed that it has gotten very tepid reviews on amazon.com. However, this is exactly my point. Even if it is not a good game, it has sold extraordinarily well.

http://www.bbc.co.uk/news/technology-18181020

That it tries to drive the share price up.

Some of, if not all of those people were not doing a good job.

You do know that the people who received the free month could only do so if they had an active subscription paid for as of 22 April, right? Whether or not they included the weekend trials (since they specifically didn't say "1.3 million paying subscriptions," the argument could definitely be made, though I personally doubt that there'd be that many weekend passes to make any significant difference), I really wish people would stop using the "this includes the free month" argument. It's irrelevant. Those with the free month had a paid subscription barely two weeks before the meeting.

Diablo 3 was in development from since 2001.

Since 2001. Eleven years.

It has to sell well for Blizzard to get the development costs back.

Umm...you do know the 6.3 million that they sold did NOT include the 1.2 million they gave away to those who took the 12 month subscription to WoW. So that 1.2 million means little to nothing. Sorry, but that 6.3 is pretty darn impressive even if I am not one of them.

In any case, just think of the layoffs as restructuring. Is it good or bad for the game? Honestly, only time will tell. It's a critical move at a critical juncture so there really is no way of knowing presently. Question becomes does it slow the progress any even just slightly because many folks are on the edge and won't wait any longer for some changes.

This game is 6 months old, and with them focusing on the online and digital market (as they claim they're doing) ... one would think SWTOR would have a higher priority. Simple logic really.

You do realize that some companies buyback to boost their value (short term), right? We're not seeing that now are we? They are idling at their 52 week low (and have been). With all the negative publicity, it's not going to get any better. On top of that, they're beginning to show a pattern ... something that people like me watch for very carefully when it comes to stocks and the market itself.

You see, buybacks are sometimes good for the company. But sometimes, they're used as smoke and mirrors. I'm going with the latter on this one. The market is backing my claim with the average value we're seeing on a consistent basis.

SWTOR is in trouble and investors are not happy about the large investment put into the game and seeing so many leave and/or voice negativity over the product ... EA is doing something about it and in my eyes, they're going about it the wrong way.

All those jobs are listed as having been posed in April...

Actually, the original 1.7 million number was the largely inflated one IIRC, as that included people who hadn't yet cycled out of their trial periods. The 1.3 million, as stated in the shareholders report, was composed of a far higher percentage of paying subscribers who had signed up for a regular subscription. And remember, they'd have to lose another 800,000 before they would have to consider downsizing at all (such as downsizing the work force and shutting down servers) , much less shut down. Considering that they're going to continue sinking money into SWtOR and expanding their overall workforce (9,200 to 9,700), they certainly aren't acting like they're having problems with it.

It all comes down to perspective, though. WoW lost more than that number after SWtOR came out, and I don't remember too many people claiming doomsday. Could be the 10 million strong subscriber base on their end.

Also, from the perspective of the company's management, the development costs stop being relevant once they've been spent. It's a "sunk cost", unrecoverable, and irrelevant to future operation (take a business finance or microeconomics course if you don't believe me). What's relevant to future & current operation is marginal revenue versus marginal cost. If the former is greater than the latter, operations continue. If vice versa, that's when you (net) downsize or reduce production (remember, EA's planning to EXPAND their net head count and shift the ratio of engineers to other employees).

Now, that doesn't mean development costs don't matter, but they matter up to the point you pay them. When a company decides what projects to pursue, they do an analysis of how much they'll be paying to develop the project in each year. These values are then calculated with the expected interest rate to determine the present & future value of the money that would be spent. Analysis is done to determine the range of expected profits and the statistical likelihood of different outcomes. This is all put together and then compared against other, similar projects. It's based on this analysis (weighted average cost of capital, or WACC) that a company decides what projects to pursue. That's when the development costs are relevant.

Also, Bioware/EA currently haven't released their own numbers for how much SWtOR cost to develop, so those numbers come from various analysts. The lower range of estimates is $80,000,000. The upper range is $200,000,000. A difference of $120,000,000 between estimates doesn't instill a lot of confidence in me as far as their accuracy, so I'd prefer to wait until EA releases their own numbers about it (if they do, though by that point they may be even less relevant to the customers/shareholders.).