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Madcatz - Q2 2008 Earnings Report

MCZ - Mad Catz Interactive (American Stock Exchange) - (Closing Price - 1.08)

Mad Catz Interactive reported moderate results for their fiscal 2008 second quarter and they announced the acquisition of Saitek, a PC games peripheral provider.

In the second quarter Mad Catz Interactive posted earnings of 0.02 per diluted share on revenues of 16.9 million. Revenues were down 35% from the second quarter of last year due to the “culling process to reduce low-margin product placement, the continuing impact of the console transition and strong software sales in the year-ago quarter attributable to Real World Golf 2”. Net income of 0.9 million and earnings per share of 0.02 were “both record levels for Mad Catz’ fiscal second quarter.”

I think revenue was a little soft in the quarter but net income was good. Since Mad Catz is focused on reducing low margin products I think NI (net income) and EPS (earnings per share) are better indicators of how the company is performing. Considering NI and EPS were at “record levels” I believe the turnaround in Mad Catz is still on track.

The acquisition of Saitek is another positive development for Mad Catz. Saitek is a complimentary business that Mad Catz “expects to be accretive to its fiscal 2008 earnings and cash flow”. The acquisition will also help strengthen Mad Catz’s retail distribution network, particularly in Europe.

Looking forward I expect the stock price of Mad Catz to drift up in anticipation of Mad Catz’s strongest quarter. I would recommend continuing to hold your shares for what should be a strong quarter in Q3.

http://www.intelligentspeculator.net/free_stock_picks/madcatz-q2-2008-earnings-report/#more-88