Backing up this speculation, Gamasutra quotes Riccitiello from a conference call saying "...these cuts are essential to transforming our company." From the same conference call, Kotaku reports that EA has cut a dozen unannounced projects, what EA's John Schappert called "the bottom third" of its in-progress portfolio. Presumably EA thinks there's more money in first-taste-is-free social web games than in $60 console titles, but how can that be? Low development costs, presumably.
TechCrunch's Mike Arrington has been on a bit of a crusade against the scams these social media games foist on users (see Scamville: The Social Gaming Ecosystem Of Hell) but I guess EA isn't worry about getting into this space in a big way, despite increasing scrutiny by both the FTC and the advertisers who pay firms like Playfish for worthless lead gens.
As a gamer, this just feels like really sad news for the hobby. Electronic Arts was long considered 'the Evil Empire' in gamer circles, but in recent years their attitude seemed to be softening. They were willing to try new IPs rather than cranking out sequel after sequel and, at least compared to competitor Activision (where CEO Bobby Kotick is infamous for his '...take all the fun out of making video games.' and 'We are very good at keeping people focused on the deep depression.' quotes) they seemed like they were undergoing a Grinch-like heart expansion. Apparently not. My thoughts go out to all the people affected be the cuts; here's hoping you find new gigs very soon.