Madcatz reveals declining profits in Q3 results

Peripheral manufacturer Madcatz has announced the unaudited financial results for its fiscal third quarter ended December 31st, revealing widespread revenue shortfalls - marginally lifted by a positive performance in Europe.

Net sales for the period were posted at USD 45 million (EURO 37.6 million), a decrease of 14.9 per cent on the same quarter in the previous year. Gross profits were USD 6.7 million (EURO 5.6 million), down 47.9 per cent on the previous year. The company broke even on overall profit for the quarter, compared to a profit of USD 3.9 million (EURO 3.2 million) the year before.

Madcatz president and CEO Darren Richardson commented: "The results reflect the challenging overall interactive entertainment market which was particularly difficult in North America. The console transition was expected to, and has continued to affect market demand for our core accessory offerings."

"This was especially evident during the fiscal third quarter as there was a significant slowdown in sales of wireless products and Xbox offerings. Our initiatives to overcome the anticipated console transition challenges through the development of new revenue streams and further international expansion partially mitigated the impact of the current environment," Richardson added.

European operations have proven significantly more positive for the company, with sales up 62.6 per cent from USD 4.6 million (EURO 3.8 million) to USD 7.6 million (EURO 6.3 million). Strong sales performance for In2Games' peripheral-bundled Real World Golf title continues to generate revenue for the company, and a North American distribution deal for the game has been secured as a result.

"During the quarter we were successful in Europe in growing our revenue as well as expanding our footprint, which we believe will support future growth in this market," Richardson stated. "Real World Golf emerged as a top five PS2 title in the UK and remained in the top 20 during the holiday period. Given this success we plan to introduce this title in the North American market this spring."

Looking forward, Madcatz believes that the completion of the hardware transition will enable the company to boost revenue and strengthen its position in the market, both in the US and European territories.

"We remain confident that our mix of accessories, licensed and branded offerings and software is appropriate for the remainder of the console transition and we look forward to the expected launch of Sony's PlayStation 3 console, along with the launch of Nintendo's Revolution console, which will represent the completion of the transition period," Richardson concluded.