Video Game Company 3DO Moves to Conserve Cash, Analysts Say

In what appeared to presage a round of layoffs and other spending cutbacks, Redwood City-based 3DO Co. on Monday announced a corporate restructuring that includes plans to “streamline its organization” and “reduce expenses through the elimination of redundant positions.”

The firm, which 15 months ago launched a souped-up video game player aimed at entrenching itself as a new consumer electronics standard, said it had sold 500,000 of the machines thus far worldwide.

Analysts said the move signaled the firm’s desire to conserve cash and put off another public offering as its stock continues to drift downward. A planned offering was canceled earlier this year.

“When they started out, they were going to be all things to all people,” said Lee Isgur, an analyst at Jefferies & Co. “But they know they have to make it on their own from here on out, and the best way to do that is pursue their core business.”

According to a news release, the firm will consolidate five departments--including technology and product management--under a newly appointed senior vice president of business operations, John A. Orcutt.

The statement added that “the company will reduce and postpone expenses in the development of vertical or niche markets.”

At a price tag more than twice that of the popular 16-bit Sega and Nintendo game machines, 3DO got off to a slow start. Sales have been picking up, especially outside of the United States, but this year the firm’s “multiplayer” will face new products from Sega and Sony Corp. that are likely to at least match its technology and may well undercut it in price.

Calls to the company for comment were not returned.