Mad Catz

(MCZ)

swung to a fourth quarter loss on a 21% decline in sales, as users of new video game consoles had less use for its portfolio of accessories.

Mad Catz lost $3.3 million, or 6 cents a share, in the quarter, compared with earnings of $900,000, or 2 cents a share, a year ago. Sales were $17.2 million, down from $21.8 million a year ago. The company reported a fourth-quarter gross margin of 2.2%, down from 24% a year ago.

"Consistent with industry trends, during the fourth quarter, Mad Catz experienced a decline in overall product sales for current generation platforms though we generated impressive sales levels and contributions to the total net sales mix from our Xbox 360 offerings," the company said.

Mad Catz said its sales mix was impacted by aggressive pricing by competitors, inventory reserves established on slow moving products, price protection provided to retailers and higher royalty payments under existing technology agreements.

"With fiscal 2006 year-end inventory levels at $18.4 million, a 32% decline from the end of fiscal 2005, Mad Catz has addressed the majority of the products and categories that were the subject of the price protection and slow moving inventory reserves."