Posted Tue Feb 9, 2016 at 02:40 PM PST by Brian Hoss
Hitting the rocks.
Yesterday, I went in-depth about the bad Monday that had taken place for 'Mad Catz (see here). Today, the other penny dropped. With new CEO and President Karren McGinnis at the forefront, the company announced a restructuring plan that includes a reduction of 37% of the workforce in 2016. That number includes yesterday's executive departures.
From CEO Karren McGinnis,
Today, we are announcing a restructuring plan that we strongly believe will enable Mad Catz to be more competitive and increase our focus on operational, technological and commercial actions that will help us achieve our long-term vision. These changes will allow us to operate more effectively and help create an organization that is more agile, able to pursue growth and regain share in our core markets by simplifying our processes and reducing our operating costs, thus increasing our competitiveness and profitability without compromising the quality of our product offering. This realignment of our resources will also enable us to better support strategic initiatives that will make our product slate more competitive, help us gain added consumer interest and create sustainable shareholder value.
Following yesterday's significant stock drop, the stock again went down, but with less severity, ending at $0.24 versus yesterday's $0.29 and ahead of the 2009 low of $0.16. (This was before the restructuring was announced.)
Looking at the numbers (see here), the best news is probably that while 'Rock Band 4' consumed resources and lowered margins, the outcome wasn't completely dire. (Overall Mad Catz sales were the second highest in company history for the quarter.) The issue seems more to be the resources, including loans that were tied up in this deal. At the same time, Mad Catz still undershot (at launch) and overshot (during the holidays) what was needed stock wise. (The company has capital moving forward and that's before cutting the staff.) It's going to be interesting to see how 'Rock Band 4' sales are throughout 2016.
I think I covered what all this means fairly well yesterday. What I'd add here is Mad Catz is stressing a few things, getting awareness of the products out, keeping quality up, and in the case of powerful but expensive product area like fightsticks, is keeping the stock levels manageable. The company remains committed to announced products like the Katana HD 7.1 surround sound gaming headset and of course the 'Street Fighter V' line-up of peripherals.
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