Broderbund sees wide Q4 loss

Broderbund misses analysts' expectations of a fourth-quarter loss by a wide margin as a result of higher operating costs.

Dawn Kawamoto
Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
3 min read
Broderbund (BROD) today missed analysts' expectations of a fourth-quarter loss by a wide margin, as the software company encountered higher operating costs associated with pumping money into its new product marketing.

Software maker Broderbund, which later this year is scheduled to ship its new Riven game to replace its aging blockbuster Myst, posted a loss of $18.9 million, or 91 cents a share, for the quarter, compared with profits of $4.2 million, or 20 cents a share, a year ago.

Broderbund purchased Parsons Technology from Intuit, closing the deal during the fourth quarter. But excluding $27.2 million in acquisition-related charges, Broderbund would have posted a smaller loss of $2.2 million, or 11 cents a share. That, however, was still below analysts' estimates of a loss of 2 cents a share.

Meanwhile, revenues for the quarter ending August 31 reached $45.7 million, up 42 percent from the $32.2 million reported last year.

Broderbund?s fiscal year ended with revenues of $190.8 million, up from $186.2 million the previous year. The company?s net loss for the year--including a $36.5 million charge--reached $13.5 million, or 65 cents a share, compared with profits of $6.8 million, or $1.71 a share, a year earlier.

"The last year has been a period of transition for Broderbund. We are nearing the end of an intensive development cycle with increased marketing activities to build support for our new products," said Joe Durrett, chief executive officer, in a statement. "While our financial results were impacted by higher operating expenses and acquisition costs, we made great progress in building a stronger revenue base."

In addition to developing Riven, Broderbund also is working to develop games for the competitive Internet arena and to adapt some existing titles for the Web.

As part of that plan, the company last month announced that it has created an online business unit. The new division is expected to be fully operational next month, and is scheduled to deliver its first products next year. Broderbund also established its Red Orb entertainment division during the year.

But as part of the restructuring, Broderbund cut 4 percent of its workforce, or 45 employees, from its payroll. And several analysts remain skeptical that the software maker?s efforts to enter the Internet gaming market, where a number of companies have experienced a rocky road, will be successful.

Meanwhile, the company also has been moving ahead with its educational software business.

"The additions of Parsons Technology, Living Books and ClickArt have added strength to our direct-to-consumer, education, and productivity capabilities," said Durrett. "We believe these activities were a significant investment in our future and provide an even stronger foundation for the company as we move into next year."

Broderbund released 16 titles new titles during the year, ranging from Print Shop Premier Edition 5.0 for graphics, to customized greeting-card software Print Shop Signature Greetings.

Broderbund, which announced its results after the market?s close, ended the day at 32-5/8, down 1/2 over yesterday. The stock climbed sharply from the mid-20s range at the end of August before peaking around 38 a share in mid-September.