Majesco gets analyst's thumbs-up

Nollenberger Capital Partners' Todd Greenwald adds once-troubled publisher to his coverage list, says it has successfully turned the corner.

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Two years ago this week, the bottom fell out on publisher Majesco Games. But after overhauling everything from its management to the type of games it makes, the publisher might be staging a comeback. At least, that's what Nollenberger Capital Partners analyst Todd Greenwald thinks, as he today initiated coverage of the stock (NASDAQ ticker: COOL), giving it a "Buy" rating and projecting a return to profitability.

In 2005, after making an unsuccessful grab for top-tier publisher status with Psychonauts and Advent Rising, Majesco sharply downgraded its financial outlook for the year and CEO Carl Yankowski unexpectedly quit. The stock lost 47 percent of its value in a single day, and the company suffered one setback after another, from a class-action lawsuit from its shareholders to a messy split in the boardroom that ended with the resignations of two board members, the departure of interim CEO Morris Sutton, and a near-delisting from the NASDAQ stock market.

Since the beginning of its woes, Majesco has retreated from the frontline publisher market (selling its The Darkness and Ghost Rider titles to 2K Games along the way) and concentrated more on mass market and budget titles, with many of those coming on the Game Boy Advance, Nintendo DS, and Wii. It's a strategy that Greenwald thinks is paying off.

"We believe Majesco has had a first-mover advantage on these platforms," Greenwald said, "and will succeed by developing games exclusively for these platforms, while most competitors are mostly 'porting' games already developed for other consoles. This porting strategy will not necessarily work with the Nintendo demographic; this demographic is far from the core gamer, who is typically 18-34 years old, male, and interested in games like Madden, Halo, Grand Theft Auto, and Gears of War."

Greenwald points to Cooking Mama, Cake Mania, and New York Times Crosswords as Majesco titles that show the publisher "gets it" when it comes to what games will succeed on Nintendo platforms. Majesco shares finished today's trading at $1.64, up more than 12 percent from yesterday's $1.46 close.

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