EIDSY sells Opticom stake!
Eidos plc
Disposal and Further Trading Update
Part Disposal of Holding in Opticom ASA Continuing Downturn in Entertainment Software Demand
LONDON, March 24 /PRNewswire/ -- Eidos plc (Nasdaq: EIDSY - news), one of the world's leading publishers and developers of entertainment software, will announce its results for the quarter and full year ending 31 March 2000 in the last week of May 2000.
Further to the statement of the third quarter figures on 28 February, the Company announces a disposal of the majority of its holding in Opticom ASA (``Opticom') resulting in an exceptional profit before tax of some 84 million pounds sterling. The Company also reports that trading has deteriorated markedly since the statement on 28 February.
Part disposal of holding in Opticom
The Board announces that it has reached agreement to sell 1,140,000 of its total holding of 1,476,052 shares in Opticom for NOK 1,100 per share to a consortium comprising Credit Suisse First Boston, Thomas Fussell and Robert Keith. Thomas Fussell and Robert Keith are respectively Chairman and Managing Director of Opticom. The proceeds will total NOK 1,254,000,000 (approximately 94 million pounds). Eidopt, the joint venture between Eidos and Opticom, continues to progress as planned.
The disposal resulted in an exceptional profit before tax of approximately 84 million pounds, which will be reported in the results for the year ending 31 March 2000.
Key Products Released
A total of 8 titles have been released since 18 February including Fear Effect (PSX), Dragon Warrior Monsters (GBC), Soul Reaver (Dreamcast), Urban Chaos (PSX) and, in Europe and Australia only, Resident Evil 3 (PSX) and Final Fantasy VIII (PC).
Whilst many of these products have reached high positions in the retail charts, there has been a material shortfall between the Company's expectations of sale volumes and the actual number of units sold through by retail. The Company believes a significant portion of the shortfall against expectations relates to adverse market conditions across all major territories and a general slowdown in consumer demand. In the light of these conditions the Company's experience has been that retail ordering levels of even its most successful titles have been lower than expected.
Before the end of the current quarter, the Company will release several other key titles including, UEFA Champions League (PC and PSX), Tomb Raider: The Last Revelation (Dreamcast), Thief 2 (PC) and Resident Evil Survivor (PSX).
Transition Phase
The Company believes that these lower retail order levels are partly a result of the transition in the console markets to the next generation platforms, such as Dreamcast, PlayStation 2, Dolphin and X-Box. The Company anticipates that these new more powerful gaming platforms will have a positive impact on the market in the long term. However, the transition is likely to lead to a further weakening of current generation software sales in the near term.
Research and Development
The Company continues to invest significantly in research and development in order to ensure a full pipeline of high quality, compelling games. It will continue to seek to leverage existing franchises such as Tomb Raider, Championship Manager, Soul Reaver and Commandos across the next generation platforms as well as seeking to establish new ones. The Company will continue to bear heavy development costs for next generation games during the 2000 calendar year and does not anticipate significant revenues from this investment until the installed base of such platforms has been established in 2001 and beyond.
Retail Channel and Release Dates
The Company believes that the currently lower level of consumer demand has led to congestion in the retail channel. Accordingly, the decision has been taken to delay the release of certain products including Nomad Soul (Dreamcast), F1 World Grand Prix (PC), Tomb Raider (GBC) and Daikatana (PC) to the first quarter of the 2001 financial year. This will allow more time for existing product to move through the retail channel.
Outlook for Year
Although it is too early to predict results for the year, the Board currently expects that the second half operating result will be significantly worse than that achieved in the second half of the 1999 financial year. This implies the results for the financial year ended 31 March 2000 will be substantially below those of the previous year.
Future Prospects
The Board believes that there will be continued difficulties affecting current trading as the market moves to the new generation of gaming platforms in the near term. However, it is the Board's view that the release schedule for the next 12 months remains of high quality including sequels to Commandos and Gangsters, as well as further iterations from key franchises such as Tomb Raider, Championship Manager and Soul Reaver. The future success of these franchises will however be dependent upon the prevailing market conditions at the time of release.
Whilst the transition clearly presents challenges for all market participants, the Company will continue to focus on ensuring that the cost base is brought into line with the anticipated levels of turnover and that the measures now being taken to improve the management of the product development cycle are fully implemented.
Eidos will continue to position itself to take advantage of opportunities afforded by the arrival of the new platforms. Development of 7 PlayStation 2 titles is already on-going with anticipated releases in the next 18 months.
SOURCE: Eidos plc
Has anyone an idea about the future of this stock?
This year Opticom saved their ass, but who will ride to their rescue next year?
With the Tomb Raider franchise declining in popularity and no real other first class blockbuster on the horizon, I'll avoid this stock! Let them drop below 5 and I might take a closer look at them, but at current levels they are undervalued!
Regards
Kai
P.S.: Any thoughts? This board is "dead", come on guys, let's bring some live back in it! |
