SCi Entertainment Announces Large Loss and Restructuring Plans

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SCi Entertainment, parent of Eidos, announced its interim financial results and plans for restructuring following the company's recent troubles and failed efforts to be acquired.
First, the results: For the six month period ended December 31, 2007, Sci Entertainment reported an operating loss of £81.4 million (around $162 million) compared to an operating loss of £17.9 million in the same six month period the previous year. The total loss for the period was £83.4 million compared to a loss of £13.0 million in the same six month period the prior year. The company blames capitalized development costs for the significant drop in operating income. SCi has also delayed the release of four titles, including Tomb Raider: Underworld, until the fourth calendar quarter of 2008 (the holiday season). If SCi Entertainment cannot resolve its short- and medium-term financing needs, there is a concern that company will have trouble meeting its costs, although management is confident about the long-term success of the company. SCi's board hopes to raise £45 to £55 million by issuing new equity through the capital markets.

SCi's restructuring will center around changing "from a centrally controlled development and publishing model to a studio-led business focused around cornerstone products, such as Tomb Raider, Hitman, Championship Manager and Deus Ex." SCi has cancelled 14 projects that it believes will not generate an acceptable return on investment and plans to significantly reduce its costs. Cost reductions will involve cutting SCi's staff by 25% and cutting annual operating costs by £14 million (at a one-time cost of £7 million). SCi is also creating a third-party business unit to manage relationships with third-party developers.

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This page contains a single entry by Editor published on February 29, 2008 12:34 AM.

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