Gotta love the MCZ board chatter ...for entertainment at least. Guys, think about where MCZ would be if it didn't go through the transition it has undetaken. By all accounts, gaming market is struggling, as was the overall consumer picture for electronics this season. Add to that were in the final days of various console platforms before new ones come out, and you had a recipe for disaster for the old MCZ. The new MCZ is generating a customer base that helps it withstand all of these vagaries, expand margins, and turn a nickle profit, and everyone is bummed. Classic.
The objective for MCZ is to continue to establish itself in the core gaming business and be the provider of choice, so that there is year round demand for their products... A $.05 qtr sandwiched by a a few other qtrs where they are earning a penny or two is a healthier company than one that does $.09 in the holiday qtr and then loses money every other qtr when the artificial demand goes away.
The real positive in this report is Int'l sales....will be interesting going forward to see how MCZ does in establishing a toehold in the Pacific Rim countries.
Hey a8bil....I think your giving too much credit to MCZ. The way I understood things from reading this board, MCZ was in the sweet spot of its product cycle....lots of new stuff with decent margins all coming in the strongest qtr of the year with absolutely atrocious year over year comp. What happens when these products get a bit older? I mean the sales number was real #$%$.
The US market is deteriorating as gamers are declining at a pretty rapid clip. I would think the same may start to come true in Europe and the rest of the world. I also think while there are positives in MCZ' international sales...there are also negatives. Its just plain harder to know your customers well spread around the world as well as you do at home. And that can lead to some big mishap quarters.
Hi Fab...I'm not sure your take is accurate. First, I think MCZ is just starting to establish itself as something other than cheap peripheral manufacturer. You can see in the press-release that marketing is now the focus. New products are there, getting the gaming community to understand the new MCZ is the challenge. I can tell you that when I was down at my local BB and asked for the best gaming headset, they said Tritton and Astro. That's a good sign.
Second, there is a console transition ahead of us and I think that the prospect of that has to impact sales across the board in the gaming industry. Add to that global economy issues and you have tight pocket books. I have two college age sons and I can tell you that their interest in the Xbox is no less today than it was three years ago...that's all they and their friends do when they're back in town.
Basically, you're making the case to get out of the gaming industry in toto, which if that's you're take on the industry, that is fine. However, I just think the factors outlined above is making it challenging on the industry...there will be renewed demand in coming qtrs, and the question is whether MCZ is positioning itself to take advantage of that demand. I think they are.
a8bil - that is quite the spin yo. I have a couple bones of contention however.
The stock was priced at .60 before this disaster was announced - if it were trading around .30 were it belongs your post might have a bit more validity.
This was not a .05 quater sandwiched between a few other quarters where they are earning a penny or two. In fact this is a .05 quarter following 2 quarters of -.03 EPS! Probably with Q4 to be negative as well! Wake up and smell the coffee or pass me some of what you are smoking! Depending on how bad Q4 is this thing could have ZERO profits for this year and we are at the inflection point???!!!
Those are all good points. Here's the rub, though. DR could have avoided creating excessive expectations easily after last quarter by saying the industry was in a funk, but that improved profitability for the quarter was expected. He had an industry backdrop to support that kind of conservative guidance. Today, the perception might be completely different. However, he virtually assured some top line growth even in a bad backdrop. Today's reaction is because of how he put things when he last spoke to us. It's almost as though he intentionally overstated expectations, IMO.
I hear you, but I guess I didn't buy into the $55MM calls everyone was making here. Afterall, those are predictions based on the tea -leaves reading everyone is doing.
You can see that the topline miss (if thats what you want to call it) can be attributed almost entirely to the drop in MadCatz branded peripherals. Let's assume that teh $10MM drop in Madcatz sales is reversed...are you happy then? I wouldn't be. Those peripherals are the past. The issue is how is Tritton doing? How is Cyborg doing? All of them seem to be doing well, as is the Int'l expansion. Could it be even better? Perhaps. As I noted, my visit to Bestbuys around me showed Tritton, etc. all out of stock. Seems MCZ could have sold more if it had inventory, etc., but I'm curious to understand why. Were they cash constrained? Supplier constrained? Or, was it planned to avoid excess inventory going into the console transition phase we are entering. I don't know, but would be curious what is said on the CC in that regard.
I'm not happy that the stock is going to be whipsawed by the traders, but I see a lot of good things happening with the new business Madcatz is pursuing, and that his why I am invested here. I am patient money and can wait to see if Madcatz can continue to grow double digits in its new business lines. They are the future.
Intentionally overstated expectation - where have I seen that before - oh yeah when he came out with the presentation for 300 - 500 million in sales right before he laid the pipe on us! This guy is dirty dirty dirty!