The company's operating loss the quarter which ended September 30th was $2.4 million, compared to a loss of $607,000 last year. The significantly lower than expected results resulted from the late release of two titles,
Little League Baseball 2002 for Game Boy Advance and
Tom & Jerry War of the Whiskers for the PS2, which shipped in October and November, respectively. Newkidco also felt the sting of large customer deductions due to poor sell through, price erosion and related markdowns on its various titles.
Looking forward, the company cited a "difficult market" for Game Boy Advance games, and said that its Q4 results could be impacted by that factor as new GBA titles ship. To help its financial picture, the company said it is in the process of restructuring. The restructuring process includes $1 million in new working capital through a private debt placement, a new distribution agreement with Jack of All Games, a "refocusing" of the company's core business on four of its popular children's properties, and continued layoffs and overhead reduction.
