Interplay Cites Game Delays for Large Loss

Irvine-based Interplay Entertainment Corp. said Wednesday it lost nearly $17 million in the fourth quarter on a sharp drop in revenue, largely because of delays in shipping new games.

The video game developer said it lost $16.6 million, or 91 cents a share, for the final three months of the year, well exceeding analysts’ estimated losses of 39 cents a share. The company turned a profit of $6.5 million, or 54 cents a share, in the fourth quarter in 1997.

Revenue slumped nearly 62% to $20.6 million from $53.3 million.

The company suffered when it was unable to ship two games, Messiah and Earthworm Jim 3-D, said Brian Fargo, chairman and chief executive.

“We expected $35 million in sales from those two titles, which would have gone straight to our bottom line,” said Jim Wilson, chief financial officer. “Based on just this, we knew it was going to be a tough quarter.”

But the popular game Baldur’s Gate also was delayed until the last days of 1998, dropping shipments of software titles far below what the company had anticipated.

Interplay said it experienced twice as many product returns than usual. Analysts say it had too much product available in an already stuffed and hyper-competitive retail market. When the titles didn’t sell, say experts, retailers began shipping the software back to Interplay.

The quarterly loss included a $2-million adjustment in the company’s deferred tax asset.

For the year, Interplay posted a net loss of $28.2 million, or $1.91 a share, compared with a net loss of $14.4 million, or $1.30 a share, in 1997. Revenue increased 5.7% to $126.9 million from $120.1 million.