The turnaround effort at
( MWY) is beginning to look like it may never end.
The struggling video-game publisher warned Tuesday that its third-quarter loss would be much wider than expected. Additionally, the company said it will fall far short of its previous full-year top- and bottom-line forecasts.
The move marked the third time the company has widened its predicted loss for the full year.
In a statement, the company blamed the lowered full-year outlook on lower-than-expected reorders by retailers of some of its recent games and the company's decision to push the release of several titles from this year into next.
"While we are disappointed with sales of some of our products this year, we continue to be excited about the progress we are making on, and the prospects for, our 2006 and 2007 products," company CEO David Zucker said in a statement. "We intend to focus on building a business that can thrive during the console transition and provide a foundation for success early in the next cycle."
In the short term, though, the company predicted more of the same: big losses on disappointing sales.
In the third quarter, which ended in September, Midway now expects a loss of $29 million, or about 33 cents a share, on sales of about $30 million when it reports results next Monday. Previously, the company predicted a loss of $19 million, or 22 cents a share, on the same amount of sales. Analysts, meanwhile, were expecting the company to lose about 25 cents a share on $30.3 million in sales, according to Thomson First Call.
The company will see a wider-than-expected loss in the quarter thanks in part to accelerated amortization and the write-down of acceleration of capitalized development costs related to games it released in the third quarter and that it will release in the holiday period. The move suggests that Midway now thinks those titles aren't selling -- and won't sell -- as well as the company originally expected.
Meanwhile, the company now expects to post a full-year loss of about $95 million, or $1.09 a share based on its current share count, on sales of just $145 million. The company's most recent outlook,
given in August, was for a loss of $60 million, or about 69 cents a share, on $200 million in sales. Analysts had predicted a 72-cents-a-share loss for the year on $198 million in sales.
The company said it was delaying several unnamed titles into 2006. Additionally, the company has seen worse-than-expected demand for titles such as
The Suffering: Ties That Bind
But the warning is only the latest effort to bring down expectations. The company's original 2005 guidance,
given early this year, was for a loss of about $38 million, or 43 cents a share, on sales of $225 million.
Although it once was one of the dominant game publishers thanks to hit franchises such as
, Midway has struggled for years. The profit it posted in the fourth quarter last year made that the quarter the only one in which it has operated in the black in the past five years.
With the ongoing losses, the company has
flirted with insolvency.
Despite that terrible track record, Midway has been able to linger on, thanks in no small part to
Sumner Redstone, who now owns nearly 90% of the company's outstanding shares. With Redstone's backing, the company
raised $72 million in a convertible note offering in September. The move more than doubled the company's cash on hand.
Shares of Midway closed regular trading Tuesday up $1.20, or 6%, to $19.88.