Majesco Entertainment Reduces Fiscal 2005 Financial Outlook
EDISON, N.J, July 12, 2005 -- Majesco Entertainment Company (NASDAQ: COOL) , today announced it is revising annual guidance for its fiscal year ending October 31, 2005, reflecting reduced net revenues and operating results.
The Company's previously stated expectations were for net revenues of $175 to $185 million and operating income of $16 to $18 million with at least 50 percent of the net revenues occurring in the fourth fiscal quarter. The Company now anticipates net revenues for fiscal 2005 to be between $120 million and $125 million and an operating loss of $16 million to $19 million. Included in the expected operating loss are: write-downs of receivables as a result of a recent bankruptcy of one of the Company's customers; provisions for impairments of capitalized costs and severance costs; as well as increased allowances for price protection which will be recorded as a reduction of revenues. The Company anticipates that these items will total approximately $12 million and be included in the fiscal third quarter.
As a result of the factors described above, the Company expects net revenues for the current quarter ending July 31, 2005 to be in the range of $5 million to $10 million, net of the aforementioned increased provision for allowances for price protection, and an operating loss between $19 million to $22 million.
The lower expectations are attributable to the following factors:
- Substantially weaker than expected sales across all of the Company's product lines
- The movement of one of its key movie-based video game titles out of the fiscal year in order to better coincide with the related theatrical release
- Recent feedback concerning inventory levels indicates lower than expected initial orders for many of the Company's products, and soft reorders for the remainder of the year
- An exceptionally slow summer season exacerbated by an earlier than expected impact of the upcoming video game platform transition
"We are disappointed in our anticipated results for the year. Our weaker than expected sales and recent discussions with industry partners have led us to conclude that it is prudent to adjust our guidance." said Jesse Sutton, President. "Despite the difficult retail environment we are experiencing, we plan to exploit the growing market for video game products and remain focused on producing high-quality games and other digital entertainment products."
About Majesco Entertainment Company
Headquartered in Edison, NJ, Majesco Entertainment Company ( NASDAQ : COOL ) is an innovative provider of digital entertainment products and content . More information about the Company can be found online at www.majescoentertainment.com.
Safe Harbor
Certain statements contained herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as "may," "will," "intend," "should," "expect," "anticipate," "estimate" or "continue" or t he negatives thereof or other comparable terminology. The Company's actual results could differ materially from those anticipated in such forward-looking statements due to a variety of factors. These factors include but are not limited to, the demand for our products; timely development and release of our products; the ability to secure licenses to valuable entertainment properties on favorable terms; continued consumer acceptance of the gaming platforms on which our products operate and our products; competitive factors in the businesses in which we compete; fulfillment of orders preliminarily made by customers; the ability to attract and retain key personnel; adverse changes in the securities markets; and the availability of and costs associated with sources of liquidity. The Company does not undertake, and specifically disclaims any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.