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Mad Catz Losses Jump, 37 Percent Of Staff To Be Laid Off On Weak Rock Band Hardware Sales

by Mike Futter on Feb 09, 2016 at 10:13 AM

Mad Catz had been turning around its financial profile, improving on years of net losses. Reporting on the first nine months of the current fiscal year though, shortfall jumped by 439 percent. This news follows sudden, drastic staffing changes yesterday and newly reported layoffs totaling 37 percent of staff.

At this time last year, Mad Catz reported $809,000 in losses. That number is now $4.36 million. The company attributes the shortfalls to Rock Band 4 sell-through, which was lower than forecast. This has led to both softer than anticipated revenue and higher than expected inventory carrying costs.

Operating income, which had improved into positive territory last year, also now reflects a loss. The company is showing $82,000 in operating loss, compared to $652,000 operating income at this time last year.

The company posted its second-highest quarterly net sales in its history during the third quarter. Net revenue jumped 114 percent to $65 million. However, gross margin dropped from 26.9 percent to 17.5 percent. That means that for every dollar of revenue Mad Catz earned during the quarter, it only kept $0.175. For the nine-months of the year so far, gross margin is only 19.9 percent.

The translation here is that while Mad Catz revenue is up, its products cost more to make, ship, and carry in inventory. With Street Fighter V and a number of Mad Catz products right around the corner, the company has the opportunity to make up some of this lost ground.

[Source: Mad Catz]


Our Take
Mad Catz attempts to sugar the pill with improved sales numbers, but the news here is not good. Rock Band 4 was an enormous risk, and Mad Catz shouldered the retail burden. That gamble did not pay off, and now the company appears to be hanging on to plastic instruments that it couldn’t sell to Rock Band diehards that held onto their old gear.