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Wii, DS Market Challenge Majesco Third Quarter Sales

Volatility in Wii casual and DS retail software is continuing to push declines for Cooking Mama house Majesco, as the publisher's third fiscal quarter shows sales down 29 percent year over year.
Volatility in Wii casual and DS retail software is continuing to push declines for Cooking Mama house Majesco, as the publisher's third fiscal quarter shows sales down 29 percent year over year to $12.2 million. The company's narrowed its net losses, however, reporting $1.6 million in the red versus $5.2 million in the same period last year. "While our revenues were down for the quarter versus last year, they were consistent with our internal expectations," said company CEO Jesse Sutton on the company's earnings call, as transcribed by SeekingAlpha. On the call, Sutton attributed the decline in revenue to tough comparisons to last year's release slate; last year, the company benefited from Night At The Museum, ongoing sales of Gardening Mama, and the accumulation of 11 other Wii and DS releases. This quarter, the company has only Tetris Party Deluxe to call a "significant" release. Sales are down on a wider-lens view, too. In the nine months leading up to the July 31, 2010 close of its third fiscal quarter, sales fell 26 percent to $52.3 million versus the same period of 2009. But cost reductions appear to be helping the company in the long term; while in the comparable period of 2009, the company faced a $2.7 million loss, and now sees a $600,000 profit. In August, the company's executive VP and chief financial officer John Gross resigned to take another position, and Sutton said Majesco has appointed Mike Vesey, who's been with Majesco for four years, to take the CFO role. It also appointed Chris Gray as senior VP of production, while Todd Greenwald, formerly a Signal Hill analyst covering the game sector, is Majesco's new manager of investor relations and strategic planning. Looking ahead, Majesco, which has traditionally succeeded with its focus on the casual, kids and family sector, expects to be a beneficiary of the Move and Kinect launches: "We are very excited about these initiatives, and we feel they reflect the common sense within the industry consistent with our strategic focus that the great opportunity ahead continues to be offering quality entertainment experiences to the growing demographics in gaming," said Sutton. Wedbush analyst Michael Pachter agrees: "The company views itself as 'demographic-focused and platform-agnostic" at this point in time, despite its recent focus on the Wii and DS," he says. "We think that diversification is a smart move, as sales on the Wii and DS continue to decline."

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