Eidos issues profit warning

Though Hitman: Contracts is atop the charts, reorders fail to materialize, prompting the publisher to issue a profit warning to investors.

By anyone's standards, Hitman: Contracts looked like a winner. With only 10 days on the North American market, the multiplatform game was the fifth most popular title on both the PlayStation 2 and Xbox charts for April 2004. It was the eighth-highest-grossing console game for the month, earning $4 million dollars.

However, Hitman's promising start wasn't enough to prevent the game's publisher, Eidos PLC, from issuing a profit warning today in London. Initially, Eidos had expected $16 million worth of Hitman reorders. But today's profit warning conveyed the news to investors and analysts that a shortfall was inevitable, though Eidos did not clarify what the shortfall would be.

Eidos North America president Rob Dyer told GameSpot today that Hitman's disappointing sales are "endemic to what's happening in the business at this time." And the short-term outlook isn't looking any rosier. "May is proving to be a pretty tough month," said Dyer. But he did glean some hope from the PS2 price cut announced last week at E3. "It's the first thing we want them to do," said Dyer. "A price cut juices the market."

Although NPD reported that year-to-date revenue from console games is up 3 percent ($1.454 billion versus $1.414 billion), April PlayStation 2 hardware sales were off 9 percent compared to April 2003. "When Sony gets the sniffles, we get pneumonia," Dyer said. Indeed, game sales were also down in April, slipping 2.9 percent from the year before.

A late-breaking story in The Times of London today suggests Eidos may have more than sluggish Hitman sales to deal with. The paper reported that Britain's Financial Services Authority, a widely respected independent organization that regulates the financial services industry in the UK, was considering investigating the company's trading activity and share price movements. The company's share price has jumped by a third since takeover rumors began circulating last March. Today, the company's stock tumbled on the London market, shedding 30 percent of its value, closing at 120 pence. Commenting on the rumors, Dyer reiterated that such speculation was completely unfounded.

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