Prominent UK software house Eidos, developer of the Tomb Raider games, today reported a huge full year operating loss, which experts said is a result of a slow market ahead of the launch of Playstation 2 (PS2).
The creator of computer-animated heroine Lara Croft reported an operating loss of £26.8m for the year ending 31 March. This compares with a profit of £39.2m in the same period last year. Full year sales were down by 14 per cent to £194.8m, and the company's share price sagged by 13.7 per cent to 340 pence by 9.41am this morning.
Despite a poor 12-month report, Eidos said fourth quarter profit is up even though sales dropped by nine per cent compared with the previous fourth quarter.
The £66m profit slump is due to a number of factors, said Eidos. Customers are waiting for the much heralded PS2 platform to ship in Europe and the US this autumn. Another reason given is the backlog of development work for the new PS2 games, with a critical shortage of managers causing production glitches. Eidos now has seven games ready for the PS2 European launch.
The present slump in sales, which is affecting the whole games industry, could be one explanation for Sony's sudden release of a handheld version of the Playstation 1, and Nintendo's updated Pokemon flavour N64.
Some European commentators believe that the rash of bad financial results in the gaming community could lead to behemoths such as Eidos becoming takeover targets. Infogrames Entertainment SA has been mentioned as a cash-rich potential suitor.
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