MCZ – Q3 2007 Earnings

By: ispeculatornew
Date posted: 02.21.2007 (12:00 am) | Write a Comment  (0 Comments)

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MCZ – Mad Catz Interactive (American Stock Exchange) (Closing Price – $0.83)

Madcatz reported very good quarterly results on Feb. 14 and I would recommend accumulating more shares.

For their 2007 fiscal third quarter Madcatz reported sales of $36.5 million. This was a decrease of 19% from the comparable quarter last year. However the decrease in sales was the result of a strategic move to eliminate less profitable products. Consequently, gross profit margin almost doubled and Madcatz reported a profit of 0.07 (which was an improvement of 0.07 compared to the previous quarter last year).

Madcatz also further strengthened its balance sheet. Bank borrowings were reduced and inventories declined. They expect to continue improving the balance sheet in the coming year.

Looking forward I expect the results from Madcatz to get even better. The CEO stated that he expects “sales from products for the new consoles to increase significantly as the installed base grows throughout calendar 2007.” Sales should also benefit from the release of new products. The CEO stated Madcatz intends to ship wireless controllers for the Playstation 3 this quarter. Madcatz is also going release its first product offerings using the INAIR Personal Sound Technology in calendar 2007.

I think the focus on higher margin products, the expected increase in sales, and the release of new products gives Madcatz multibagger potential. I would recommend accumulating more shares with a price target of $2-$3 in the coming year.

Disclosure: I currently own shares of MCZ.

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