Midway Posts Expected Q2 Loss, Looks Ahead

Major Chicago-headquartered game publisher and developer Midway Games announced is financial results for the second quarter ended June 30, 2006, with losses in line with those anticipated by the company, as it looked forward to a happier 2007. The company reported net revenue for the period to be $25.9 million, down from the $36.9 million reported during the same period in 2005, as well as a loss for the period of $31.0 million. This loss was up slightly from second quarter 2005, during which the company reported a loss of $29.9 million. “Second quarter results were in line with guidance,” commented David F. Zucker, president and chief executive officer, “and we are especially pleased by the European performance of Rise & Fall, a new intellectual property, which topped the PC charts in the United Kingdom for the first time in Midway's history, demonstrating our new European team's ability to execute.” Midway released Rise & Fall: Civilizations at War worldwide for the PC on June 12, 2006, and the title ranked as the number one PC title in the United Kingdom for the three weeks following its launch. Looking forward, Midway anticipates losses for the third quarter to be approximately $23 million, and expects to post revenue of about $24 million. For the third quarter, Midway has already released The Ant Bully for PlayStation 2, GameCube, GameBoy Advance and the PC, and will ship Spy Hunter: Nowhere to Run on September 1, 2006 for PlayStation 2 and Xbox. For the full year, the company expects revenue of $155 million, coupled with a net loss of about $70 million, up from its previous guidance of $66 million. Yearly revenue is expected to be driven by fourth quarter releases of Happy Feet and Mortal Kombat: Armageddon, the latter of which will also see a release for the Nintendo Wii in 2007. In his final statements, Zucker again pointed to next year as a key time period for Midway, as the majority of its major projects are intended for next-gen release in 2007: "We are continuing to position Midway to succeed in the next console cycle, and we believe we have demonstrated to gamers and investors at this year's E3 conference that we have a strong line-up [in the] short term, with upcoming releases of Mortal Kombat, Spy Hunter, Happy Feet, and Blitz: The League for Xbox 360 and PSP." He also referenced "...longer term [titles of importance] for next generation and PC markets with Stranglehold, Unreal Tournament 2007, The Lord of the Rings Online, and The Wheelman. We continue to believe that 2007 will show our true potential and the reemergence of Midway as a top tier video game publisher."