Bucking the trend, in what's considered one of the strongest video game markets ever, game publisher
struggled to meet its own guidance for the second quarter, blaming a poorly managed planning schedule that led to delays in some of its hoped-for hits.
Midway reported second-quarter net losses pared down to $11.22 million, or 61 cents a share, from a net loss of $29.67 million, or 81 cents a share, in the prior year -- largely due to the company shaving off its coin-operated games business last year.
Net sales came in at the low end of guidance, totaling $28.1 million, compared to $15.75 million in the prior year period.
Pro forma net loss for the quarter, excluding a preferred stock charge of $16.6 million, and a $500,000 consolidation charge, were $10.7 million, which puts them ahead of their own reduced guidance of a net loss of $11.5 million to $12.5 million. Including a pro forma tax credit of about $4 million, net losses were approximately $6.7 million, or 15 cents a share, beating consensus by a penny. (The company indicated that the tax credit was added to calculate the figure in order to compare it to consensus numbers.)
Wall Street expected the company to report a loss of 16 cents a share and revenues of $28.68 million for the quarter, based on a Thomson Financial/First Call poll.
It's a traditionally slow quarter for video game makers. But No. 1 gamemaker
posted a blowout quarter,
as did No. 2
-- both reveling in a video game cycle that is nearing its peak.
Not so Midway. In early July, the company 'fessed up to management and planning issues that led to its significantly cutting its own guidance for the second quarter and full year. As a result, investors essentially halved its share price. In one particularly cutting report, UBS Warburg games analyst Michael Wallace wrote in a report in early July: "The only way to describe it is an unmitigated disaster. This company now has little credibility."
Red Card Soccer
Gauntlet: Dark Legacy
were expected to be delivered in the second quarter but were delayed for release until the third, which cut into estimates.
Full-year numbers were cut as part of a management debacle that involves the delay of the release of its hit franchise
, which will be released in the fourth, rather than the third, quarter as previously expected. Analysts said such a delay would pull down revenues for the full year 2002, because while the game is likely to sell over 2 million copies, it will not be elgible for re-order until the following year.
At the same time, the company said it is actively searching for a new chief operating officer.
For the current quarter, the company said it expects to report $50 million to $55 million in revenues and a pre-tax operating loss of $5 million to $7 million. It reiterated full year guidance on revenue of $295 million to $310 million and pretax income of $25 million to $33 million.
Perhaps in anticipation of nothing further in bad news, investors sent Midway shares up 10 cents, or 2.22%, to $4.60 in the regular session. The company reported after the markets closed.