Game maker plans layoffs, eyes sale
3DO, maker of the "Army Men" series of computer games, watches its stock tumble after it issues a revenue warning and announces layoffs. A sale of the company is a possibility.
The troubled company, maker of the "Army Men" series of games, among others, warned late Tuesday night that revenue for its fiscal fourth quarter had come in at roughly half of its earlier forecasts, and that it is planning to cut more than a third of its work force. 3DO is also considering a buyout as one strategic option to raise money, the company said.
"Market conditions for us appeared to take a turn for the worse when the war with Iraq began," CEO Trip Hawkins said in a statement. "In recent weeks, sales of our products have not picked up as we had hoped, which is preventing us from being able to fully utilize our new credit facility."
At the end of trading Wednesday, 3DO's shares were down 50 cents, or 27 percent, to $1.31.
3DO said that fourth-quarter revenue fell below expectations, at approximately $10 million. Last October, the company said it anticipated revenue of $22 million for the quarter. 3DO will report results for the quarter, which ended March 31, in June.
Meanwhile, 3DO is reviewing its money-raising options, including selling the company, licensing the publishing rights to its games and licensing its software overseas. Late last year, 3DO borrowed $3 million from Hawkins, its founder, to stay up and running.
The Redwood City, Calif., company also issued notices to its workers that layoffs will be occurring in the next 30 days. Under the federal Worker Adjustment and Retraining Notification (WARN) Act, companies are required to give workers advance notice if they plan to lay off between 50 to 499 employees, providing those employees account for at least a third of the work force.
Although some game makers have enjoyed a boom in business, 3DO has been in a lull. The company, also known for its "High Heat" baseball games, is placing its bets on several new titles, including "The Four Horsemen of the Apocalypse" and "Street Racing Syndicate," both of which will be unveiled at the Electronic Entertainment Expo, a gaming trade show happening this week in Los Angeles.