EIDOS HIT BY DEFERRALS & CANCELLATIONS
Copyright 2001 www.ananova.com

[ December 12th 2001 ]

Eidos PLC, the UK's largest computer games maker, said its full year will be impacted by deferrals, cancellations and a reduction in its expectations for sales on certain titles, but it said the outlook for the longer term is improving. This came as it posted first half to end-September results showing sales dropping nearly 43% to £31.0 million from 54.3 million after just six new titles were shipped, against eight in the equivelant period last year.

EBITDA losses for the period totalled £18.6 million, narrowing 4.5% from an 18.8 million loss in the first half last year. Total operating losses before goodwill fell to £19.6 million from 20.5 million, while the gross margin before exceptional charges increased 4.6% to 60.5% from 55.9%. The loss per share totalled 15.4 pence before goodwill or 21.8 pence after, against 11.7 and 65.4 respectively.

Eidos said its key titles over the period, version two of Who Wants to be a Millionaire? and Commandos 2: Men of Honour, failed to achieve the levels originally anticipated. But Eidos added that it sees continuing progress in reducing its cost base, and believes that it can deliver a "significant improvement" in pre-goodwill operating performance for its twelve months to March 31 2002.

Longer term, Eidos thinks new and emerging hardware platforms will mitigate the risk inherent in bringing new titles to market. The recent launches of two new hardware systems in the US and the continuing in-roads into the mass market being made by Sony's PS2 led the group to see "strong signs of a market recovery".

It commented: "Our industry is showing significant signs of recovery whilst global economic conditions remain at best uncertain. With robust operating fundamentals and a solid portfolio of internally developed franchise properties, we believe we are well placed to benefit in the medium term from the growth potential that exists in the entertainment software market."

Eidos added that the impact of product delays has been greatly reduced compared to prior years, but the potential for further slippage in the release schedule remains. Eidos also announced plans to change its year-end from March to June.

Historically, a significant proportion of sales has taken place in the fourth quarter of the group's financial year, it explained, making the outcome for the year difficult to anticipate until a late stage. Eidos thinks that, by changing the year-end, it will reduce this uncertainty and as a result should increase its ability to respond to changing circumstances and take corrective action where necessary.