Interplay: Playing the Right Tune
For shareholders of the game developer
Interplay
Since Interplay's IPO in June 1998, the stock price has been a nightmare;
however, there could be a happy ending.
Interplay is a pioneer of the gaming world, founded in the early days of
1983. Now, the company is a publisher of a broad line of games, ranging
from action, adventure, role-playing and sports. These games are available
across a variety of platforms, including PlayStation, Dreamcast and Nintendo
64. Some of the best-selling games? It's a pretty good list, such as
Descent, Virtual Pool, Baldur's Gate, and even Earthworm Jim. In all, the
company has distribution in more than 16,000 retail outlets and has a
presence in 50 countries.
In fact, the company has been showing some traction lately. In the last
earnings report, the company had revenues of $31.6 million, which was a 34
percent increase from the same period a year ago. Actually, the company had
net income of $113,000. There was an improvement in gross margins from 35
percent to 49 percent (compared to last year).
The company released a slew of new products last quarter. Examples:
Baldur's Gate II, Star Trek New Worlds, and Caesar's Palace 2000.
Interestingly enough, Baldur's Gate II is ranked #1 in dollar volume in the
U.S.
What's more, the company will release more products in the fourth quarter.
They include Sacrifice, Giants, Star Trek: Starfleet Command II, and a new
title for the popular Virtual Pool series.
Interplay has been in the midst of a major restructuring. The company took
steps to reduce expenses, change distribution policies and deal with bad
debts. And it is working. Look at some key metrics: inventory turns went
from 7 times to 14 times annually; accounts receivable days went from 75 to
85; and working capital switched from negative $8 million to positive $5
million.
Yet, the company has not sacrificed its development cycle of new products.
All in all, it could be a nice Christmas for Interplay shareholders.
, the
experience has been similar to one of the company's gruesome games,
Fallout, which involves megalomaniac mutants and crippling radiation.