UPDATE 2-Zumba Fitness, new game launches boost Majesco outlook

Tue Sep 13, 2011 6:05pm EDT

* Q3 adj EPS $0.03 vs est loss $0.02/shr

* Q3 rev $19.5 mln vs est $17.5 mln

* Sees FY 2011 adj $0.35-$0.38 vs est $0.37

* Sees FY 2011 rev $120-$130 mln vs est $125.7 mln (Adds details in paragraphs 2-7; CEO comment; updates shares)

Sept 13 (Reuters) - Video game publisher Majesco Entertainment Co raised its full-year outlook for the third time as it bets on the upcoming launch of the sequel to its popular Zumba Fitness title and the digital version of party game "Twister".

The company, which gets about 70 percent of its revenue from the Zumba titles, expects "Twister" and other games lined up for the holiday season to help it shed its "one-game wonder" image.

The "Zumba Fitness" game, launched in 2010 and based on motion-sensing technology, has sold more than 3 million copies worldwide and continues to be one of the top-ranked games in the United States and the United Kingdom.

Majesco plans to follow up the runaway success of "Zumba Fitness" with its sequel, "Zumba Fitness II", scheduled for launch in November on Nintendo's Wii gaming console.

The company also publishes titles for other consoles like Sony's PlayStation 3 and Microsoft's Xbox 360 Kinect as well as Facebook, which has emerged as a popular destination for social gaming.

"This holiday we expect to launch many titles for the Kinect as well as the Nintendo DS," said Chief Executive Jesse Sutton said in a conference call with analysts.

"As more and more casual gamers migrate to new motion-based gaming platforms like the Kinect and the Wii, we believe this will create more opportunity for us given our demographic focus on family and casual gamers."

Apart from "Zumba II" and "Twister", Majesco is also looking to launch games such as "Alvin and the Chipmunks: Chipwrecked" and "Hulk Hogan's Main Event" on Wii and Kinect during the holiday season.

THIRD-QUARTER BEAT

Majesco expects a adjusted profit of 35-38 cents a share on sales of $120-$130 million for the year ending Oct 31.

Previously, the company had forecast an adjusted profit of 30-35 cents a share on sales of $110-$120 million for 2011.

Analysts were expecting full-year adjusted profit of 37 cents a share on sales of $125.7 million, according to Thomson Reuters I/B/E/S.

Gross margin for the quarter rose to 40.7 percent, compared with 22.9 percent last year, driven by the premium pricing of Zumba Fitness.

The company expects to spend about $1.5-$2 million on advertising and marketing to push new games and expects to benefit from these in the first quarter of fiscal 2012.

May-July net income was $1.9 million, or 5 cents a share, compared with a loss of $1.6 million, or a net loss of 4 cents a share, a year ago.

On an adjusted basis, it earned 3 cents a share.

The company, whose larger rivals include Electronic Arts Inc Take-Two Interactive Software Inc and THQ Inc , said sales rose 61 percent to $19.5 million.

Analysts, on average, expected a loss of 2 cents a share on sales of $17.5 million.

Shares of the Edison, New Jersey-based company closed at $2.66 on Tuesday on Nasdaq. (Reporting by Soham Chatterjee in Bangalore; Editing by Saumyadeb Chakrabarty)

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