Through The Fly’s Eyes: Midway

from Louis Jacobs of Theflyonthewall.com

Midway Cuts Guidance on Delays

Video game developer Midway (MWY), which broke into the ranks with titles such as Mortal Kombat, reported today that it would see a much bigger third quarter loss than than it previously anticipated. The company now expects its third quarter loss to be an EPS of (33c) versus the previous forecast of an EPS of (23c). This was much higher than the analysts’ projections of a loss of EPS (22c).

Midway explained that the loss was due to delays in releasing much anticipated games “Unreal Tournament,” which has been delayed to the first quarter of 2008, and “Stranglehold," by action movie director John Woo, which has been delayed to the fourth quarter of this year. Furthermore, the company expected lower sales of its “BlackSite: Area 51” game because the European release has been delayed until next year. The company did not explain the reason for any of the delays.

Midway’s stock has declined 3.80% so far in today’s trading to $4.05, less than half the 52-week high of $9.20.

Other video game developers Take-Two Interactive (TTWO) and Electronic Arts (ERTS), have had some of their star titles suffer delays or bugs. Take-Two’s franchise title “Grand Theft Auto” has been delayed until next year and Electronic Arts’ "Madden Football 2008" on the Playstation 3 has been plagued by bugs, though there is a patch disk available.

Still, the other companies’ delays have not affected the bottom lines or guidance the way it has impacted Midway. While title launch delays may be an industry-wide concern, Midway’s delays are unique because of its multitude, which is affecting its bottom line and, hance, its stock price.