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Eidos has announced that its profits for the fiscal year ending March 31 will be much lower than expected as demand for its games continues to deteriorate. In fact, he company said sales of ``even its most successful titles have been lower than expected'' as consumers wait for the next generation of game machines, further evidence that the Playstation market is falling faster than expected. In a statement Eidos said "the company anticipates that these new more powerful gaming platforms will have a positive impact on the market in the long term, however the transition is likely to lead to a further weakening of current-generation software in the near term." "I think it is extremely disappointing", said Guy Feld, analyst at Teather & Greenwood. "Clearly, there are credibility issues here with Eidos.""What the share price is saying is that the industry is suffering and this is a company on its last legs, which is simply not the case," said Nick Gibson, technology analyst at Durlacher & Co. This profit warning follows one made in January when the Company said that its results for the fourth calendar quarter would be weak due to slower sales. Today's news drove down Eidos shares by more than 50% in London. According to Eidos, part of the problem has been that the company didn't have enough managers working with games development studios to prevent delays. It had about 15 managers working with more than 20 games studios on about 40 projects. On Feb. 28, Chief Executive Charles Cornwall said he planned to increase the number to as many as 25 managers within eight weeks, and was working to improve ties between them and other parts of the business. Due to a glut of games now at the retail level, Eidos has decided to delay the release of certain titles including Nomad Soul (Dreamcast), F1 World Grand Prix (PC), Tomb Raider (GBC) and Daikatana (PC) to the first quarter(April-June 2000) of the 2001 financial year. This will allow more time for existing product to move through the retail channel. Like other game companies, Eidos continues to invest significantly in research and development in 2000, but will bear increasing costs for development on next generation platforms and does not anticipate significant revenues from this investment until the installed base of next generation systems has been established in 2001 and beyond. An example of this it that Eidos is working on development of 7 PlayStation 2 titles and expects these games to be releases in the next 18 months. Eidos' troubles have spilled over to the stocks other European game companies as Infogrames and UbiSoft were down in sympathy. Additionally, Eidos' troubles have lead to speculation by many that its dramatic stock price drop makes it vulnerable to a takeover. Microsoft and Infogrames have been rumoured to be interested. But a spokeswoman for Infrogrames told Reuters that "I never heard of an Infogrames profit warning neither of an offer for Eidos." "Today no less than yesterday, the company retains good intellectual property rights and there remains core value in Eidos," said Teather & Greenwood's Feld.
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