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Midway Posts Dismal Q2 Results, Stock Battered

Amidst steep charges and an 82.3 percent decline in revenue, Midway posted a staggering second-quarter loss of $54.8 million on revenue of just $5 million.
The publisher released just one game, the tepidly received Freestyle Metal X, during the quarter ended June 30, 2003, compared with seven released in the same quarter a year ago, when the company posted a less-severe loss of $11.2 million on revenue of $28.1 million. Midway also greatly widened its loss guidance for the full year to $97 million on revenue of $110 million, which includes $23.2 million in write-down charges, $9.5 million for restructuring, and $9.5 million for severance payments. In 2002 Midway lost $53.8 million on revenue of $191.9 million. Previous expectations for Midway’s 2003 results in April were revenues of $200 to 230 million toward a loss of just $7.6 to 25.6 million. Wednesday Midway’s stock dove 29 percent to $2.42 after hitting an all-time-low $2.36 earlier in the day, and sank an additional 11 percent Thursday to $2.15 after plumbing a yet new low of 2.08 earlier in the day Thursday. Midway is one of the four game publishers, in addition to THQ, Acclaim, and Activision, that has revealed it is under investigation by the Securities and Exchange Commission for methods by which the publishers recognize revenue. Take-Two was investigated by the SEC last year for similar activity and ended up re-reporting seven quarters’ worth of results.

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