Acclaim reports further losses, but projects profits for FY 2005

Publisher Acclaim has announced its results for the quarter ended December 31 and the first nine months of its financial year, revealing a $9 million loss in the December quarter on falling revenues.

That's a smaller loss than last year's $14 million, but revenues for the quarter dropped from around $63 million in 2002 to $39.3 million - a decline which is mirrored in the nine-month results, which saw revenues slide from $180.1 million to $113.7 million.

Although the company has succeeded in cutting back significantly on its operating expenses, with a restructuring effort yielding a 37 per cent drop to $26.7 million in operating costs for the nine month period, losses still stood at some $31 million - better than last years $39.6 million loss, but not by much.

Acclaim CEO Rod Cousens claims that the losses in the third quarter are down to the continuing restructuring of the company, which has seen several products being discontinued and others being shuffled out into other quarters.

However, despite his belief that these changes will deliver a much healthier company in the long term, there's still cause for concern - not least because Acclaim's tumbling nine month revenues come despite the company releasing 37 games during the period, as compared with 32 games in the same period of 2002.

Acclaim's losses are projected to continue through the current quarter, with a net loss of between $20 and $25 million expected - but the company is bullish in its outlook for fiscal 2005, which runs through to the end of March 2005. In this period, Acclaim expects to achieve profitability and positive cash flow.

Cousens' restructuring efforts are certainly bearing fruit, but the big question mark over Acclaim is whether it can strengthen its brands to the extent that they can compete with bigger publishers' at retail. The drop in the company's revenues despite a wider release schedule last year does not bode well for that effort - but to project a turnaround into profit as soon as next year, the company itself, at least, must be confident that its scaled down release schedule has what it takes to drive back into profitability.