Trademark Infringement Trial Looms for Jamdat Mobile, Jamster
Jamdat Mobile CEO Mitch Lasky told analysts in a Tues. conference call “we expect to go to trial” to resolve a legal dispute with mobile entertainment portal Jamster “sometime in November.” Over the summer, Jamdat sued Jamster for trademark infringement after consumers complained about the similarity in the companies’ names, Lasky said in Aug. (CED Aug 15 p12). He said Jamdat wants to recover damages and stop use of the name Jamster by the latter’s parent, VeriSign.
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The trial update came as Jamdat reported stronger results for its 3rd quarter ended Sept. 30. The mobile game maker’s sales soared 113% to $20.2 million; it posted a $1.4 million profit (6 cents per diluted share), up from $8,000 (0 cents) a year ago. The shift stemmed from a strong slate of titles, including Tetris, to which Jamdat recently gained worldwide wireless rights. The firm launched titles including Tetris in Europe, Japan, Korea and S. America, Downtown Texas Hold ‘Em in Europe and Jamdat Sports NFL 2006 in conjunction with the start of the 2005-2006 NFL season.
CFO Michael Marchetti said international revenue soared 91% from a year ago, representing 16% of Q3 overall sales, while subscription game-based revenue accounted for 25% of sales. The firm finished the quarter with its games carried by 15 carriers, up from 12 at the end of Q2 this year. The company expects to add more subscription channels “in the coming months” Marchetti said, offering no specifics. Verizon Wireless remained Jamdat’s #1 carrier in Q3. Jamdat said revenue from games through the Verizon service soared 67% from a year ago, accounting for 30% of overall revenue. Marchetti said Jamdat expects Verizon revenue to rise in Q4 and 2006, driven by new handset sales and marketing initiatives by both companies. He said revenue from games distributed through Cingular soared 268% from a year ago, accounting for 23% of all sales. Recently merged Sprint/Nextel accounted for 20% of Jamdat revenue, up from 17%. Marchetti said 130 products generated revenue for it in Q3, up from about 92 last year. “We are working on a number of additional strategies and partnerships that leverage our product portfolio, technology platforms and domain expertise to create defensible, cost-effective marketing reach which we are excited about for 2006 and beyond,” he said.
Lasky told analysts Q3 results improved despite “a very challenging quarter” for the industry. Besides “seasonality” the industry “has experienced in the past” during Q3, major U.S. carriers made “significant changes and upgrades to their commercial platform technologies and methodology [that] led to service interruptions and caused our sales to be lower than expected,” he said. Marchetti later cited an “unusual drop in sales” in late Aug.-early Sept. in the U.S., due possibly to Hurricane Katrina and a consumer spending dip.
But Q4 is seeing a rebound, Marchetti said. Lasky said “initial customer response to our newest releases, Doom RPG and SOCOM: U.S. Navy SEALs Mobile Recon, has been extremely positive.” He offered no specifics on sales for those games. Lasky said he is “confident” Jamdat can grow its business in Q4, which tends to be a strong quarter for the company. “We are hopeful the U.S. carriers have largely completed their much-needed platform transition” and preliminary Q4 results suggest the mobile game market is “back on the upswing,” he said. Lasky also hailed Jamdat’s knack for creating hit games and “significant leverage from our R&D spending.” Its U.S. market share has reached “unprecedented levels,” its European market share is increasing and it is “making meaningful inroads in Korea and Japan,” he said. Another encouraging sign is “a return to gaming in the Japanese market” recently after the introduction of advanced cellphones. “That’s very positive for us and for the industry,” he said.
Jamdat stands to get a boost from the planned addition of Cingular products and services to RadioShack stores in Jan., which “will virtually triple our addressable base through that channel,” Lasky said. RadioShack said in July it signed 10- and 11-year deals, respectively, with Cingular and Sprint to be long-term wireless providers at the retailer’s U.S. stores. But RadioShack plans to discontinue sales of Verizon Wireless products and services at the end of 2005, the retailer said.
Jamdat continues to increase its market share despite new and recent entries into the mobile game arena; Q3 was its 6th straight quarter of revenue growth and profitability, Lasky said. Citing independent data, he said Jamdat had a 31% U.S. market share in Q3, 4 times that of the nearest competitor. “Nearly one of every 3” mobile games sold was a Jamdat product in Q2, he said.
The firm expects to report sales of $23.5-$25 million and a 9-13 cents diluted earnings per share (EPS) profit for its 4th quarter ending Dec. 31. For the fiscal year, it expects to report sales of about $78-$80 million and a diluted EPS profit of about 38-42 cents. The firm expects to report about $120 million in sales for the fiscal year ending Dec. 31, 2006.
In other mobile game news, Superscape Group said 2 of its latest titles -- Miss Reef Pinball 3D and Scuba Solitaire 3D -- are available for download via the Orange games portal on Orange World in Europe.