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Last Update: 15-Jan-13 07:45 ET
Majesco Entertainment shares plunge 32% following Q4 loss
Majesco Entertainment (COOL $0.71 -0.35) reported fourth quarter EPS of ($0.07), may not be comparable to $0.02 Capital IQ Consensus Estimate, while revs 5.8% y/y to $26.6 million versus the $24 mln Captial IQ Consensus Estimate. Based on early analysis of sell-through during the 2012 holiday season, management anticipates holiday sales will be at least 50% lower than last year. Given the Company's dependence on holiday sales, management anticipates revenue for fiscal 2013 will be significantly below fiscal 2012. Management expects to report between a modest non-GAAP EPS loss to breakeven for the first quarter of fiscal 2013 and a loss for the full year of fiscal 2013 (consensus for $0.27). In order to better align operating costs with expected sales trends, the Company has implemented several initiatives to reduce fixed operating costs in favor of an outsourced, variable cost model. These initiatives include the closing of its social game development studio in Foxboro, Massachusetts, and reduction of game testing personnel in its New Jersey office. The Company plans to continue to develop mobile games through its production team in Southern California and the use of external development studios. In addition, the Company has eliminated certain marketing and support positions reflecting the planned reduction of its console game slate in fiscal 2013. The Company expects to record approximately $0.7 - $1.0 million in severance and other expenses related to this strategic realignment in the first quarter of fiscal 2013. These initiatives are expected to result in reduced operating expenses of approximately $1.5 - $2.0 million on an annual basis.
