Mad Catz Positive on Holiday Quarter Despite ‘Tough’ Retail Environment
The retail environment remains “pretty tough,” Mad Catz Interactive CEO Darren Richardson said on an earnings call Tuesday. Many dealers are “playing wait and see” this holiday season, “which I think is wise,” he said. But Mad Catz has “a positive outlook” for the holiday quarter, he said.
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The company already shipped its key products for the holiday season, said Richardson. Mad Catz recently launched the Tritton-branded Warhead 7.1 wireless surround sound headset for the Xbox 360 as a Best Buy exclusive in North America, he said. The Halo 4 version of the headset shipped after the end of Q2 ended Sept. 30 with launch partner GameStop, he said. The Warhead is about to go into “mass distribution” and the Best Buy exclusive will soon be over, he said. Mad Catz was “generally pleased with the performance” of the Warhead so far, he said. He wouldn’t say how many units were sold so far, but said it’s “doing quite well."
Mad Catz is “playing catch-up a little bit” on gaming headsets with Turtle Beach, which has a No. 1 market share in the category in North America, said Richardson. But Mad Catz is “quite comfortably” No. 2 in the category in North America and is “probably” No. 1 in certain unspecified European countries, he said. The number of Mad Catz products has grown at “a lot of retailers,” he said. Mad Catz is “content” with the display space its products have at retail, but has “ambitions to be doing a lot more,” he said.
Q2 sales of audio products grew 23 percent for Mad Catz from the year-ago quarter and accounted for 44 percent of the accessory company’s total revenue, Richardson said in a news release (CED Nov 7 p10). Total revenue grew 21 percent to $31.2 million and its loss narrowed to $450,000 from $486,000. Computer input device products accounted for 20 percent of sales, up from 14 percent in Q2 last year, while specialty controllers grew to 14 percent of sales from 22 percent, other controllers slipped to 5 percent of sales from 11 percent, other accessories dipped to 7 percent of sales from 9 percent, and games grew to 10 percent of sales from 1 percent, it said. Mad Catz-branded products accounted for 51 percent of sales, down from 54 percent in Q2 last year, while Tritton-branded products grew to 39 percent of sales from 33 percent, Saitek-branded products dipped to 8 percent of sales from 10 percent, and other branded products slipped to 2 percent from 3 percent.
Mad Catz was sued by New York company Humanscale, formerly called Softview Computer Products, in U.S. District Court, New York. The suit, filed Sept. 21, accused Mad Catz of patent infringement. But Mad Catz said in a 10-Q SEC filing that the complaint was never served on it and the companies quickly signed a settlement deal. The settlement gives Mad Catz “the exclusive right to enforce” the patent -- U.S. Patent 6,157,370 -- against third parties, it said in the 10-Q. Humanscale submitted a notice of dismissal to the court Nov. 6, according to a court document.
Discovery, meanwhile, was “just beginning” in a dispute with KnowledgeTech, Mad Catz also said in the 10-Q. Mad Catz sued KnowledgeTech July 6 in California State Superior Court in San Diego, claiming the defendant breached a contract with Mad Catz by failing to issue credits for defective and returned product, it said. KnowledgeTech filed a cross-complaint, Mad Catz said. A trial date hasn’t been set, it said.