MCZ – Q4 2007 Earnings

By: ispeculatornew
Date posted: 06.10.2007 (12:00 am) | Write a Comment  (0 Comments)

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MCZ – Mad Catz Interactive (American Stock Exchange) (Closing Price on Friday – 06/08/07 – $1.21)

Madcatz reported very solid fourth quarter results on June 5.

For Q4 07 Madcatz reported revenue of 19.33 million and earnings per diluted share of 0.01. Revenues were up 12 percent compared with the corresponding quarter last year and earnings per share improved by 0.07 (MCZ reported a loss of 0.06 in Q4 06). Madcatz also reported continued improvement in gross margin (29.1% in Q4 07 compared with 28.74% last quarter and 1.04% in Q4 06.)

It was significant that Madcatz reported a profit this quarter because the fourth quarter is their slowest quarter. Sales will pick up in future quarters as we head towards the holiday season and earnings should increase in tandem. Sales and earnings will also benefit from the release of new products. In the coming months Mass Effect and Halo 3 will be released (Madcatz has a license to produce accessories for both of these games). Madcatz also plans to “bring several products to market this fall which incorporate” the InAir Technology they acquired last year.

Another possible catalyst for Madcatz is the potential for console price cuts later this year. The success of the Nintendo Wii will probably force Microsoft and Sony to reduce the price of the Xbox 360 and Playstation III to gain market share. If this happens it will be a positive development for MCZ. There reduced prices will entice more people to buy the new consoles and consequently more peripherals.

I think my price target of two to three dollars is still very attainable and I would recommend accumulating more shares or starting a position if you haven’t already done so.

Disclosure: I currently own shares of MCZ.

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