Mad Catz Cutting 37 Percent of Total Workforce Amid Restructuring
The move is expected to save the company an estimated $5 million per year.
After announcing a major management shakeup yesterday that involved the company's CEO resigning, Mad Catz today posted earnings for the latest quarter--and they were up and down. First, Mad Catz announced a restructuring effort that includes a reduction of around 37 percent of the company's total workforce. This includes the senior management board members that recently left the company.
It is unclear at this time how many jobs are affected. We will update this post as we learn more.
In the near-future, Mad Catz said it plans to book a $3 million "restructuring charge" for its upcoming quarter that is mostly made up of severance pay and benefits given to terminated employees. The headcount reduction should be mostly complete by the end of the company's upcoming quarter.
When all is said and done, Mad Catz said the move should save the company around $5 million per year.
New Mad Catz CEO Karen McGinnis said she believes the restructuring effort should "enable Mad Catz to be more competitive and increase our focus on operational, technological, and commercial actions that will help us achieve our long-term vision."
More from her statement follows:
"These changes will allow us to operate more effectively and help create an organization that is more agile, able to pursue growth and regain share in our core markets by simplifying our processes and reducing our operating costs, thus increasing our competitiveness and profitability without compromising the quality of our product offering. This realignment of our resources will also enable us to better support strategic initiatives that will make our product slate more competitive, help us gain added consumer interest, and create sustainable shareholder value."
In terms of business performance, for the holiday quarter ended December 31, net sales jumped 114 percent to $65 million, representing Mad Catz's second highest quarterly sales period in its 26-year history. Sales growth was led by a massive 391 percent increase in revenue from the Americas, but offset by a 6 percent decrease from EMEA regions and a 56 percent drop from APAC countries.
Overall, Mad Catz posted a profit of $1.2 million, down 10 percent from $1.4 million last year.
McGinnis, who took on that role just a day ago, said quarterly sales growth was driven by "strong Rock Band 4 sales," but offset in part by the "continuing softness" of the company's audio and PC gaming products.
The company is a co-publisher of Rock Band 4 alongside developer Harmonix.
Although Rock Band 4 performed well, sell-through was "lower than originally forecast." This resulted in "higher inventory balances as well as lower margins due to increased promotional activity with retailers," McGinnis said. She went on to say that a "competing product" impacted Rock Band 4's sales, most likely a reference to Guitar Hero Live.
She also stressed that Rock Band 4 is a "multiple-year product" that Mad Catz will continue to invest in and support. Additionally, she noted how Harmonix is treating Rock Band 4 as something of a platform, with new DLC released almost every week and regular content updates keeping the game fresh.
Mad Catz will hold an earnings briefing today at 2 PM PST / 5 PM EST where the company may offer additional insight into its business performance and the workforce reduction. Check back later for more.
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