Spectrum HoloByte Projects Lower Revenues

Sales of Magic: The Gathering and Star Trek Generations fail to meet expectations.

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Spectrum HoloByte said today that it expects net revenues of US$13 million to $16 million for the current quarter, ending June 29. The figure is lower than analysts had expected.

These results constitute a loss of $.22 to $.28 per share for the game developer and publisher best known for titles like Civilization II and Magic: The Gathering. In addition, the company is looking at the book value of certain equity investments in strategic partnerships - an event that could add to the quarter's loss.

The actual results won't be released until late July, and this is the acknowledged slowest time of the year for most gaming companies. The company is also attributing the shortfall to lower-than-expected orders of new products and sales of back catalog titles.

Spectrum HoloByte's newest title, Star Trek Generations, launched last month, sold well compared to other new titles, but it fell short of the company's expectations. Magic: The Gathering was also expected to do better this quarter than it did. Both of these titles, Spectrum HoloByte's latest, are licensed properties - a fact that the company said cuts in on worldwide gross margins.

According to SH, Magic gamers want online, multiplayer tournament support as well as new add-on decks and better AI. The lack of this in the current product has cut into sales. The company will add these features through expansion packs this fall.

Despite the downgrade of its stock by at least one financial institution, SH is optimistic about the rest of the year. It planns to launch the majority of its titles in the later part of the year to take advantage of what it believes will be a strong holiday season. The company is counting on the proliferation of MMX-loaded, high-speed computers and 3-D accelerators to help sell entertainment software. "If we can successfully release our planned slate of products, we should be able to capitalize on those features," said CEO Stephen Race in a statement.

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