Infogrames Showing Minor Improvement

Infogrames has reported its audited first-half results, and we find the company finally limiting its losses. As part of an effot to streamline operations and avoid bankruptcy, Infogrames sold several internal studios during the half, including Shiny, Paradigm, Reflections, and Melbourne House.

So far, at least, the strategy appears to be working. Infogrames reported an operating loss of 33.4 million euros ($43.9 million) for the six months ending September 30, compared to a much larger loss of 45.4 million euros ($59.8 million) during the same span in 2005.

Unfortunately, the company's overall sales were down from 123 million euros ($162 million) to 105.5 million euros ($138.9 million) this year. Most of their revenue came from Europe and Asia (63.5%), and the rest from the U.S.

On the other hand, there was an improvement to the company's gross margin of 7.6 points, at 41.9% of revenue, which comes to a total of 44.2 million euros ($58.2 million). Factors attributing to this improvement include improved distribution systems and some mild success of the Xbox 360 racing title, Test Drive Unlimited, which sold about 120,000 copies in the U.S. as of October 31.

Subsidiary Atari Inc. reported their earnings at the start of this month, where they announced a very tiny profit for the July-September quarter. However, at only $311,000, it remained a reason to celebrate because it marked the company's first profitable quarter in a few years. Lastly, Infogrames shareholders have approved a debt-restructuring plan designed to allow the company to improve its overall financial situation.

11/30/2006 Ben Dutka

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