After dancing to the top of the charts, what do you do for an encore?

When fellow Fool Rick Munarriz looked ahead at Majesco Entertainment's (Nasdaq: COOL) fourth-quarter report, he expected a solid beatdown of analysts' earnings targets. After all, the company has been in the habit of shocking the Street for some time now. Share prices have followed suit: "The stock's heady gains leading into the announcement indicate that a decent trouncing is already being priaced into the stock," Rick concluded.

Oops!
Well, it didn't exactly play out like that. The average analyst wanted to see non-GAAP earnings of $0.04 per share on sales around $27 million, but Majesco could only muster $25 million in revenue and a $0.07 net loss per share. And if that wasn't bad enough, management's guidance for the next year looks bleak.

Shares fell about 27% in off-hours trading. This from a stock that nearly doubled on the year-ago report's terrific numbers -- and more than tripled overall in 2011.

Majesco's sales fell squarely within the guidance provided in the last quarterly call, but the bottom line did not. Unfortunately, management put on blinders to pretend that everything is all right: The earnings release never once mentions the words "soft," "disappointing," or "fail." The topic of reasons for the flabby net result didn't even pop up in the analyst call.

So I'm trying to piece together an explanation from the bits of numerical evidence on hand. Majesco is spending like gangbusters on new development, nearly doubling its research and development budget year over year. Another $1.3 million in administrative expenses left Majesco's unimpressive 8% sales boost unable to keep up with rising costs. So it looks like the company plans for hypergrowth that its titles just can't deliver.

But wait -- there's more!
Not yet, anyway. CEO Jesse Sutton has high hopes for the upcoming Microsoft (Nasdaq: MSFT) Kinect title, Zumba Fitness Rush. Unlike the original multi-platform title and the Nintendo Wii sequel, this title supports "premium downloadable content." That's the in-game purchasing model that makes many Facebook and smartphone apps tick, and is the key to the success of Zynga (Nasdaq: ZNGA). Can Sutton follow that successful pattern with pay-to-play aerobic dance routines?

Majesco steps even deeper into the fitness market in 2012 with "a variety of new offerings" focused on celebrity trainer Harley Pasternak. The guy is responsible for Hollywood bodies like Katie Perry, Lady Gaga, and Megan Fox, not to mention red-hot vampire Robert Pattinson. If Majesco can cash in on these pop-culture connections, this could still be a good year. But all of these names were already hot in 2010. How long can these stars stay sizzling?

More trouble ahead?
I wish management could acknowledge and discuss the shortcomings, and then lay out a real plan to tackle whatever roadblocks lie ahead. Instead, we're left estimating the outcome of some high-profile bets. Importantly, the holiday season falls in Majesco's first fiscal quarter, so management should know by now how that crucial session turned out. And like I said, the official outlook for 2012 isn't good.

Online games are killing specialized gaming consoles, and publishers like Majesco are on the losing end of that revolution. The company's handheld glory days are fading, and I'm not sure that the Wii and Kinect are strong enough to support a second wind. Maybe it's best to leave this company nursing its wounds and focus on the next rule-breaking multibagger instead of the last one.