That's cool, I suppose, but the top line fell 28% to a little more than $11 million. Midway needs to get its top line cooking if it wants to give Activision
The company's plans do sound interesting. Mortal Kombat: Armageddon is headed for Wii. Those spooky fast-food creatures from Aqua Teen Hunger Force will be featured on the PlayStation 2 in time for the holidays. The big news, however, has to be the North American PC release of Midway's The Lord of the Rings Online: Shadows of Angmar. The company is quite conspicuously excited about it and is so far pleased about its reception.
But will this be enough to return Midway to contender status? Well, I'm not holding my breath for profitability anytime soon. The company still calls for a net loss of $0.44 per share for the full year on a reported basis and $0.27 per share on an adjusted basis. And the fact that the guidance hasn't changed since last time continues to fuel my bearish stance.
Midway is in the midst of a turnaround, and if it does end up hitting its own expectations -- let me say that it had better do that much -- then it will at least continue its welcome pattern of narrowing losses. One interesting development during the quarter can be found in operational cash flow -- Midway actually generated a small amount of money from operating activities as opposed to using it. There was still no free cash, however, and that's no fun.
Fools should continue to disregard Midway as an investment idea. I realize that the losses are improving, but cash flow is still in need of a lifeline. Leveraging the Lord of the Rings franchise is a good move, but Midway will need additional hits to fuel shareholder value.
Play around with some more Foolish articles:
- Stay Off This Midway
- Fool on Call: Electronic Arts' Dominating Dynasty
- Take-Two and Call Me in the Mourning
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Fool contributor Steven Mallas owns shares of Activision. As of this writing, he was ranked 7,356 out of 28,402 rated investors in the Motley Fool CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.