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[ September 1st 2000 ]

Eidos, the computer games publisher best known for creating Lara Croft, said talks with a potential bidder were continuing on Thursday as it reported wider first-quarter losses amid difficult trading conditions. Eidos, which revealed 10 weeks ago that it was in discussions with an unamed suitor, said the outcome of the talks was too early to determine. It is understood that Eidos has held early stage negotiations with Infogrames Entertainment, the French software company, about a cash and shares offer, but it is not thought that any deal is imminent.

Mike McGarvey, chief operating officer, said Eidos would make a further announcement as soon as appropriate. One of the stellar performers of last year, Eidos has seen its value fall by about a third since a series of profit warnings sparked by the downturn in sales ahead of the arrival of new games consoles. Although Eidos shares have risen recently on takeover speculation, the company does not expect the difficult trading conditions to ease in the second quarter. Nick Gibson, games analyst at Durlacher, said: "In the medium term, Eidos will be subject to the rhythms of the market, which is not going to be very favourable for the next 12 months."

Eidos on Thursday said the release of new titles such as the Sydney Olympics game, Chicken Run and 102 Dalmatians would lift sales in the run-up to the release of Sony's PlayStation 2 - now expected in the UK in November. Mr McGarvey said he hoped the release of the Tomb Raider film would stimulate demand, while the company was developing a version of the game for Microsoft's X Box console. He added that the company was considering a return to the strategy employed in the early years of Tomb Raider of striking exclusive deals with hardware providers.

Pre-tax losses increased to 22.3m in the three months to June 30, from 20.9m a year ago. Revenues were flat at 16.8m while losses per share were 14.8p (16p). Eidos shares closed up 1.28 per cent at 495p on Thursday.

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