It seems that the strategy of focusing on fewer, but bigger and better, games is paying off for Midway Games (NYSE:MWY). After the bell yesterday, the company reported its first quarterly profit since 1999.
Midway's fourth-quarter revenues jumped 156% to $77.2 million, helping the company reverse last year's $27.8 million loss to come up with a $17.6 million profit. The video game publisher's $0.19-per-share profit came in a penny short of the analyst estimate, but it is remarkable nonetheless.
Three Midway titles passed the 1-million-units-shipped mark during the fourth quarter: the latest Mortal Kombat game for the Sony (NYSE:SNE) PlayStation 2 and Microsoft (NASDAQ:MSFT) Xbox; the arcade-style NBA Ballers -- a competitor to Electronic Arts' (NASDAQ:ERTS) NBA Street series; and a classics compilation called Midway Arcade Treasures. To ensure regular sequels of legendary arcade hit Mortal Kombat, Midway announced that it had acquired Paradox Development -- the developer behind the next Mortal Kombat game -- this past November.
A few weeks ago, Midway also signed a license to make games based on Time Warner's (NYSE:TWX) Cartoon Network. It's a move that will help Midway challenge THQ's (NASDAQ:THQI) leadership in targeting a younger gaming demographic.
While Midway is clearly making progress, an annual profit will have to wait at least another year. The company posted a net loss of $19.9 million for the year; though revenues are expected to climb 40% to $225 million in 2005, the net loss is expected to almost double to $38 million, since the company plans to invest heavily in games to be released in 2006 and 2007 on the next generation gaming platforms.
Midway also expects to lose $18 million during the first quarter on $14 million in revenues.
Midway may have missed the analyst estimate, but the bottom line here is that it was a solid quarter to cap off a year of progress.
For more Fool coverage on Midway, check out:
- Midway's Battle
- Midway to Profitability
- Midway Purchase Was Inevitable
- Is Midway Back?
- Midway's Not Suffering
Fool contributor Jeff Hwang owns shares of Electronic Arts. The Fool has a disclosure policy.
