Midway losses lessen
Lower expenses, higher revenue help Mortal Kombat-maker boost Q4 net revenue by 38.8 percent; publisher still down $77.8 million for year.
In 2005, the holidays brought little joy for Midway Games. The once mighty publisher had a terrible calendar and fiscal fourth quarter, losing $37.8 million ($0.42 per share) in just three months.
One year later, the story was very different. For the quarter ending December 31, 2006, Midway managed to trim its net loss to just $2.0 million ($0.02 per share). Net revenues were up 38.8 percent, going from $69.8 million to $96.9 million.
The upswing was in large part due to the success of the multiplatform film tie-in Happy Feet, which shipped a combined total of 1.8 million units worldwide. Also contributing were the PlayStation 2 and Xbox editions of Mortal Kombat: Armageddon, which sold a combined 563,379 copies domestically in 2006. Worldwide, the fighting game topped 1 million copies sold.
"The fourth quarter of 2006 was a landmark quarter for Midway," Midway president and CEO David Zucker said in a statement. "Our largest revenue quarter in seven years included our largest initial ship-in for a single title, Happy Feet, the culmination of our marquee franchise Mortal Kombat on current-generation systems, and the kickoff of our next-generation releases with Blitz: The League on Xbox 360 as well as four Wii titles." The Wii titles in question were Happy Feet, The Ant Bully, Rampage: Total Destruction, and the Grim Adventures of Billy & Mandy.
Another factor in Midway's lowered losses was its reduced development and marketing costs. After spending $33.1 million in the last quarter of 2005, the company shrunk its budget to just $24.2 million during the same period in 2006.
Despite a banner fourth quarter, Midway still had a relatively rough year. For the 12 months ending December 31, 2006, the company lost $77.8 million ($0.86 per share), $3.3 million of which was due to expenses related to stock option grants. Still, that was a major improvement over 2005, which saw the company hemorrhage $112.8 million ($1.30 per share).
Midway's share price slid in after-hours trading; as of press time it had sunk $0.22 (2.86 percent) to $7.47 on the Nasdaq.