Interplay’s Losses Worse Than Expected
Interplay Entertainment Corp., the troubled developer of games for personal computers, posted a third-quarter loss on Tuesday that far exceeded Wall Street’s expectations.
The Irvine-based company lost $17 million, or 75 cents a share, for the quarter ended Sept. 30, compared with a $15.1 million deficit, or 83 cents a share, for the same period last year.
Analysts had expected the company to lose about $4.5 million, or 20 cents a share, according to Zack’s Investment Research.
The results reported Tuesday include $10.5 million in charges for restructuring Interplay’s international distribution arm, paying down bad debts and covering the cost of retailers canceling and returning products.
Without the charges, Interplay lost $6.46 million, or 29 cents a share.
Third quarter revenue was $23.6 million, down 37% from a year earlier. The drop comes even as Interplay has enjoyed successful sales on two of its recent titles--the online role-playing game Baldur’s Gate and the ultra-violent Kingpin: Life of Crime.
“The numbers may seem disappointing,” Manuel Marrero, Interplay’s chief financial officer and chief operating officer, admitted to analysts on a conference call Tuesday.
But a recent influx of money, as well as a push to expand its presence in the video-game console market, could offer the company some short-term relief, he said.
Last week, a $25-million deal to sell a controlling stake of Interplay to French software developer Titus Interactive S.A. was completed.
With it, Interplay received $15 million to pay off debts and use as operating capital, officials said. Interplay had received the first $5 million installment earlier this year; the final $5 million note will come by the end of November, officials said.
In return, Titus picked up 10.8 million shares of Interplay, or 36% of the company. Titus will control 58% of Interplay after several other related deals between the two companies and Interplay chief executive Brian Fargo are closed by year’s end.
As part of its investment, Titus Chairman Herve Caen has become Interplay’s president and will be in charge of distribution, financial and daily operational issues. Fargo, who founded Interplay, will remain chairman and chief executive and will head up product development and marketing decisions.
Interplay will follow Titus’ lead and begin developing more titles for video game machines such as the Sony Playstation II, Nintendo 64 and Sega’s new Dreamcast console systems.
“Our target is to have our revenues split, generally 50-50, between PC and console,” Marrero said. “Now that mix is 56% PC, 16% console and 28% [licensing deals].”
The news was released after the market closed Tuesday. Interplay’s stock dropped 3 cents, closing at $2.03 a share.
