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Mad Catz may be forced to delay shipment of...

Mad Catz may be forced to delay shipment of its M.O.J.O. “micro console” that’s at the heart of its nascent GameSmart initiative, said CEO Darren Richardson on the company’s fiscal Q1 2014 earnings call late Thursday. While a delay isn’t firm, the company doesn’t want to compromise the product at launch to meet a shipping date, Richardson said. “There are a couple of technical challenges that we need to overcome,” he said, calling it part of the “normal course” of bringing any “complicated product to market.” Some of the challenges are internal and others rely on third parties, he said. He cited the advantage of having a high-powered console in the market for Christmas and said “we're doing everything we can in our power to get this product to market for the holiday.” Meanwhile, Mad Catz earnings continued to be impacted by the transition to the next generation of console gaming products, Richardson said. The upcoming gaming console transition is also distressing sales of Mad Catz’s higher-priced audio products as some consumers “temporarily shifted purchases” toward lower priced products, said Chief Financial Officer Karen McGinnis. The company is continuing to focus on lower-priced products, such as its Kunai headsets, until the release of the next-gen Xbox and PS consoles create a market for higher priced accessories, she said. Sales of Mad Catz audio products dropped 9 percent in Q1 from the year-ago quarter, but the company’s strategy to expand beyond consoles “is paying off,” McGinnis said, as the company reported a 26 percent sales hike in products for the PC market including game-oriented R.A.T. mice, S.T.R.I.K.E. keyboards and F.R.E.Q. headsets, she said. While the company is “eagerly looking forward” to the launch of Xbox One and PS4 this fall, it’s leveraging its technology and “aggressively building a position” in the emerging smart device gaming market said Richardson. Xbox 360 has posted impressive numbers, selling more than 75 million units since it launched seven years ago, but Richardson noted there were “ten times that number” of smartphones and tablets sold in 2012 alone and 1 billion are forecast for this year. Smartphone and tablets are also gaining traction in emerging markets, where they are establishing themselves as “very capable platforms” for an assortment of entertainment including gaming, music, videos and social media, he said. He noted that the upcoming iOS 7 includes controller support, and while touchscreen games won’t be replaced “any time soon,” Mad Catz expects more games to include controller support as a result of “opening the entire living room gaming experience” to smart devices. The company’s GameSmart initiative is aimed toward that emerging opportunity, said Richardson. Net sales in the quarter ended June 30 dropped 14 percent to $18.7 million, as a 37% decrease in sales to North America was partially offset by sales increases of 3 percent in Europe and 24 percent in Asia Pacific and China, the company said. The quarterly net loss widened to $2 million from $1.7 million in the year-ago quarter, it said.