Europe Proves Silver Lining In Mad Catz Financials

Officials from video game peripheral maker and peripheral-bundled game publisher Mad Catz Interactive have revealed financial details of the company’s third quarter ended December 31st. During this time net sales saw a decrease of 14.9 percent, with gross profit falling by 49.7 percent. Net sales during the Christmas gift giving period were $45.0 million, down from $52.8 million at the same time last year. Gross profits were $6.7 million, compared to $13.2 million in 2004. The company’s gross profit margin for the quarter was 14.8 percent, compared to 25.1 percent previously. Overall profit for the quarter was at break even, compared to a profit of $3.9 million the year before. The company has blamed the disappointing financial results in part on the strengthening of the U.S. dollar, as well as the traditional problems associated with the end of a console generation. Commenting on the results, Darren Richardson, president and CEO of Mad Catz stated, "The fiscal 2006 third quarter results reflect the challenging overall interactive entertainment market which was particularly difficult in North America. The console transition was expected to, and has continued to affect market demand for our core accessory offerings. This was especially evident during the fiscal third quarter as there was a significant slowdown in sales of wireless products and Xbox offerings. Our initiatives to overcome the anticipated console transition challenges through the development of new revenue streams and further international expansion partially mitigated the impact of the current environment.” The company has seen increasing success in its European business, though, where sales were up 62.6 percent to $7.6 million during the third quarter. "During the quarter we were successful in Europe in growing our revenue as well as expanding our footprint, which we believe will support future growth in this market”, said Richardson. The peripheral-bundled Real World Golf game, distributed by Mad Catz in Europe, emerged in the fiscal third quarter as a top five PS2 title in the UK, and remained in the top 20 during the holiday period. Given this relative success, Mad Catz plans to introduce this title in the North American market this spring.