Video game publisher Majesco has released quarterly results for the third quarter of fiscal year 2005, a period ending July 31st, 2005, and has delivered worse than expected results after an already traumatic time
for the company. Net revenue plummeted to $4.6 million, decreasing by 73% from Q3 2004's revenues of $34 million. The company posted an operating loss of $38.6 million, compared to the operating profit of $3.1 million from Q3 2004.
Although no specific titles were cited, sluggish sales of relatively high-profile games like Psychonauts
and Advent Rising
were the primary driver of Majesco's poor performance, which compared especially unfavorably to strong sales of the company's Game Boy Advance video products in the same quarter the previous year. The company also cited changes in market conditions in general as a factor in the loss.
The losses combined with the movement of Jaws Unleashed
, its two biggest upcoming titles, into Q1 2006, have led Majesco executives to revise its guidance and lower expectations for the year. The company now anticipates net revenues of a mere $60 - $65 million for the year, and losses of a gigantic $40 - $45 million. The outlook has declined from the already-drastically-revised expectations of Q2 2005, in which the predictions were $120 - $125 million in sales and losses of $16 - $19 million.
As a result, Majesco will reexamine its business model, says president Jesse Sutton: "We will maintain our focus on digital entertainment with an emphasis on video games. Our value product line will remain a core part of our business and we will selectively publish frontline titles. Additionally, our strategy includes pursuing low-risk opportunities in the mobile and online markets with our existing intellectual properties as well as new products."
Though announced after the bell, stock traders did not take kindly in the slightest to this latest Majesco announcement, especially given the news that the company has just $10.3 million in cash and cash equivalents, and can borrow only around a limitation of $7.5 million under its current lending agreement, giving some possibility of "an adverse effect on future operating prospects and continued growth", with shares down over 35% to $1.54 in after-hours trading.