The world's largest game publisher Electronic Arts Inc., has decided to slash 1000 jobs or about 10% of its workforce, due to weakening economy and disappointing sales in North America and Europe.

The latest action, expected to save $120 million a year, is an expansion of cutbacks declared just two months ago by the publisher of the Madden NFL football franchise, the Sims and other titles.

Video game giant said this month that it would be forced to trim costs, cancel some game projects and make deeper cuts than the 6% workforce reduction it announced in October.

However, it is unclear that how the company's California operations, with offices in Redwood City, Playa Vista, Westwood and Emeryville, will be affected.

The company stated in a release that most of the job cuts should be completed by the end of the fiscal year on March 31, 2009.

Investors reacted positively to the news on Friday and Electronic Arts' shares closed the day at $17.39 on Nasdaq, up 3.76% compared to previous close of $16.76.