Redundancies hit Zumba Fitness publisher Majesco

Redundancies hit Zumba Fitness publisher Majesco
Craig Chapple

By Craig Chapple

January 15th 2013 at 12:34PM

Weak demand for products on current generation consoles blamed for poor performance in 2012

Zumba Fitness publisher Majesco Entertainment has closed its Boston studio and enacted a number of layoffs across the company, it has confirmed.

In its latest financial report, Majesco confirmed reports that it had closed its social game development studio in Massachusetts, while it had also laid off game testing personnel at its New Jersey office.

The company said it planned to focus on mobile games going forward through its production team in Southern California and through the use of external developers.

Severance pay and restructuring costs have been put at approximately $700,000 to $1m.

“In order to better align operating costs with expected sales trends, the company has implemented several initiatives to reduce fixed operating costs in favour of an outsourced, variable cost model,” read a statement from Majesco.

Net revenue for Majesco was up by six per cent for the quarter ending October 31st to $26.6m, but it also reported a $3m operating loss during the same period. Net loss for the quarter was $2.7m, down from a loss of $3.9m during the same period in 2011.

For the 12 months ending October 31st meanwhile, net revenues increased to $132.3 million, although operating income fell significantly from $11.4m in 2011, to $3.7m in 2012.

Majesco blamed a weak demand for products on current generation consoles and question marks over the popularity of next-generation consoles as the reason for a poor performance in 2012.

“As a result of the weakness in demand for products on legacy console platforms and uncertainty around consumer adoption of the next generation of consoles, management is modifying its practice of providing quantitative fiscal year revenue and earnings guidance," read a statement.

"Instead, for fiscal 2013, management is presenting a qualitative assessment of its outlook for financial results. Based on early analysis of sell-through during the 2012 holiday season, management anticipates holiday sales will be at least 50 per cent lower than last year. Given the Company’s dependence on holiday sales, management anticipates revenue for fiscal 2013 will be significantly below fiscal 2012.

"Management expects to report between a modest non-GAAP EPS loss to break-even for the first quarter of fiscal 2013 and a loss for the full year of fiscal 2013.”