Interplay Greatly Reduces Size of Its Delayed IPO

Computer-game maker Interplay Entertainment Corp. is sharply scaling back the size of its initial public stock offering.

The Irvine-based company, which said in March that it hoped to raise about $72 million in a public stock sale, said it now plans to raise $27 million, according to documents filed Tuesday with the Securities and Exchange Commission.

The company said it expects to sell 5 million shares of common stock, down from an original 6.25 million. The stock is expected to be priced at about $6 per share, according to the filing.

Market watchers had expected Interplay to launch the public offering nearly two weeks ago. The delay, as well as Tuesday’s adjusted figures, reflect both the difficult nature of the IPO market and the ongoing difficulties other game makers have encountered on Wall Street.

“It’s a really horrible time to be a game company that wants to go public,” said Tom Taulli, stock analyst with IPO Monitor. “The gaming industry lately has been under a lot of pressure from investors. And the IPO market is not very forgiving unless you’re in a very specific--and hot--Internet market.”

Video-game stocks have been a mixed bag throughout 1998. Industry powerhouse Electronic Arts Inc. has performed well, with its stock price rising 40% over the last 12 months thanks to surging profits and a stream of best-selling titles. But Broderbund Software Inc., which is responsible for two of the four best-selling games for PCs last year, has watched its stock plunge as much as 32% this year.

“This is a hit-driven industry,” said Derek Brown, a multimedia analyst with Volpe Brown Whelan & Co. in San Francisco. “When you couple that with the rising development costs and the constant fight for retail shelf space, you’re starting to see a split market with a very small group of people at the top.”

Interplay officials, who have not said when the company will launch its IPO, declined to comment Wednesday.

According to the most recent filing, proceeds from the offering will be used to repay $25.4 million in debts and $1.5 million to distributor Universal Interactive Studios.

Universal is the company’s biggest shareholder at 49.4%. Interplay founder Brian Fargo, 35, owns 44.9% of the stock, according to the filing.