Future of Eidos Still Unclear As Talks With Suitors Continue
As Eidos reported disappointing preliminary results for its fiscal year ended June 30, the future of the U.K. publisher best known for its Tomb Raider game series remained unclear Wed. Noting again that his company had “received expressions of interest from a number of parties” to possibly buy it, Eidos Chmn. John van Kuffeler said discussions with suitors were “progressing well.” The publisher didn’t name them, and Kuffeler warned “there can be no certainty at this stage as to whether or not they will lead to an offer being made for the company.”
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Eidos revealed in June it had started a strategic review of all options, which included a possible sale of the company (CED June 18 p 5). At the time, the publisher expressed concern about the “continuing need to invest more heavily in R&D ahead of the next hardware cycle,” in which the costs of game development are expected to skyrocket.
Although Eidos boasted Wed. that it was able to deliver on its “key objective of having all games available for release on time” the past year, it said sales of its key titles were disappointing. The company said it sold 1.7 million units of Hitman: Contracts -- its biggest release of the year -- and 4 other titles each sold 500,000 to a million units. But it said games market had been unexpectedly soft, particularly in the U.S., starting in May. As a result, it said, the previously anticipated 700,000 units of reorders for Hitman: Contracts “did not materialize” although the title topped the charts and then maintained “a strong chart position in both Europe and the U.S.” since its release in April. Because of the soft market, the company said it decided in June to postpone launching ShellShock: Nam ‘67 until this month to give the new franchise “a better opportunity to deliver on its true potential.” As a result, that title’s operating profit contribution shifted from last fiscal year to this.
Eidos said its turnover dropped to Pounds 133.9 million in the year from Pounds 151.5 million, and it posted a Pounds 2 million loss before taxes vs. a Pounds 17.4 million profit last year.
The company said that, “for the first time,” it released all of its titles -- 14, including 22 SKUs -- on schedule. Of those titles, it said Backyard Wrestling: Don’t Try This At Home, Deus Ex: Invisible War, Championship Manager: Season 03/04 and Legacy of Kain: Defiance each sold 500,000 one million units. The company also sold another one million units of Tomb Raider: The Angel of Darkness. It said back catalog sales represented 15.7% of its overall revenue, up from 11%.
Although Eidos said its “underlying business” and game portfolio remained “strong and well positioned for the future” and its cash position “remains strong” at Pounds 37.4 million, the publisher admitted that its “lack of operational scale and diversification continue to expose [it] to changing market conditions.” The company said its management “remains focused on driving the business forward” and its upcoming game releases include a “strong mix of sequel and new franchise titles.”