Midway Shows Reduced Loss, Predicts Profitable Q4

Author: by David Jenkins, Simon Carless

Officials from Midway Games have announced improved financial results, although still reporting a loss for the quarter, for the three and nine month periods ended September 30th. The company has also raised its revenue guidance for the whole year, ending December 31st, following a major restructuring of the company over the past 18 months. Specifically, revenues for the company’s third quarter were $17.0 million, up 47 percent on the same time last year. Net loss for the period was $13.9 million, compared to a loss of $23.3 million in 2003. For the full nine months so far of this financial year the company has seen revenues of $84.4 million, up from $62.4 million in the same period last year. Net loss was $37.6 million, greatly reduced from a loss of $87.5 million the previous year. Midway's third quarter only saw one game released, the Japanese RPG import Shadow Hearts: Covenant, which, although praised by the company as "a game that has garnered average review scores in the upper 80's, according to Gamerankings.com", is unlikely to become a massive seller when compared to franchise titles such as the somewhat revitalized Mortal Kombat series. Coincidentally enough, the currently in-progress fourth quarter sees the release of Mortal Kombat: Deception for PlayStation 2 and Xbox, as well as Midway Arcade Treasures 2 for PlayStation 2, GameCube and Xbox, and the company is raising its full-year revenue forecast from $157 million to approximately $162 million, a 75 percent increase over 2003 figures. However, the company’s prediction of a net loss of $20 million for the year remains unchanged, even though the company is predicting profits of $17.5 million in the fourth quarter, the first profitable quarter for Midway since 1999. The company's financial results also included some intriguing footnotes, including a massive $9.5 million 2003-era write-off relating to severance terms for former CEO and president Neil Nicastro, and an unspecified "intellectual property infringement case involving characters appearing in one of our videogames" which actually reduced projected administrative expense when settled in October 2004.