Majesco shares tumble on earnings, guidance
NEW YORK (AP) — Shares of Majesco Entertainment Co. tumbled Tuesday, a day after the video game publisher reported fiscal first-quarter earnings that fell slightly short of Wall Street predictions and issued a disappointing profit prediction for the current quarter.
THE SPARK: Edison, N.J.-based Majesco earned $7.7 million, or 19 cents per share, for the quarter ended Jan. 31. That was up from $6.8 million, or 18 cents per share, in the same quarter last year.
Excluding one-time items, the company posted an adjusted profit of $7.3 million, or 18 cents per share, for the recent quarter. Analysts, on average, expected a profit of 20 cents per share, according to a FactSet poll.
Revenue rose 37 percent to $66.2 million from $48.5 million, while analysts expected $54.9 million.
For the full fiscal year, Majesco said it expects to post an adjusted profit of 25 cents to 35 cents per share on $130 million to $140 million in revenue.
Analysts polled by FactSet expect a profit of 36 cents per share on $136.5 million in revenue.
THE BIG PICTURE: Majesco said its results for the quarter, which included the holiday shopping season, were "strong" and boosted by heavy demand for its "Zumba Fitness 2" game for the Nintendo Wii.
The company said it was also pleased with its sales of "Cooking Mama 4: Kitchen Magic" for 3DS, and "Alvin and the Chipmunks: Chipwrecked" for Kinect, Wii and DS.
But the steep increase in sales was partially offset by higher costs, including a more than doubling of the company's software development costs and license fees to $19.3 million.
THE ANALYSIS: Rodman & Renshaw analyst Amit Dayal backed his "Market Outperform" rating for Majesco, but cut his price target for the company's stock by $2 to $5.
"Though we continue to remain enthusiastic about the overall prospects for Majesco, we are taking a slightly conservative stance with our financial expectations for the company in fiscal 2012," Dayal wrote in a note to investors.
The analyst said that while the company may post better-than-expected sales for the year on strong demand for its Zumba games, it will need to diversify its product lineup if its wants profits to increase.
SHARE ACTION: Down 38 cents, or 12.8 percent, to $2.59 in heavy afternoon trading, after falling as low as $2.55 earlier in the session.
Over the past 52 weeks, the company's shares have traded between $1.61 and $4.53. Since the beginning of the year. Majesco shares were up about 22 percent prior to Tuesday's session.
