Eidos results: How not to be a millionaire
- Added:
- Aug 31, 2000
The results are not all bad news for the beleaguered games group. One of the causes of the company's travails has been slippage in its new releases schedule over the past year, but this time the company seems to have remedied that problem by going for fewer releases but getting them to market on time, with Sydney Olympics 2000 released on August 25 and Deus Ex released ahead of schedule in the US, where it promptly went to No. 1.
It terms of its headline figures, the company seems to have managed to achieve a certain degree of stabilisation, with revenues up 12.5% on the first quarter of last year to 18.9m and pre-tax losses up by only 6.2% to 22m, but behind these figures, there are a number of danger signs lurking, with gross margins down from 50.4% to 45.9% as advertising costs increased from 23.4% of turnover to 26.8%. Even more worryingly, stocks were up by 110% to 13.8m.
On the positive side, both R&D and general and administrative costs have been kept under control, as have fixed selling and marketing costs, but this will do little to allay fears about the company's cash position. With cash reserves of 14.7m, net losses of 15.3m over the quarter and debts due within a year of 22.3m, the company will be hoping that the acquisition talks it is engaged in at present with an unnamed party reach fruition quickly, otherwise it may have to find ways of raising further finance itself, and in the present climate, that may not be so easy. The company's next big release is to be based on the hit TV gameshow “How to be a millionaire” and investors in Eidos will be hoping that it will do for the company what the TV show does for its luckier contestants. With the computer games market having become as much of a hit and miss affair, however, it is unlikely to provide them with a short-cut to riches.
Despite these developments, Eidos' shares continued on the upward trajectory they have been on throughout August, gaining 5.4% on their opening price to reach 491.5p on a volume of 1m by 15.00 UK time.