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I try my best to invest with my head, not my heart, gut or pride. Sometimes I fail, sometimes I succeed. It's about all I can ask for.
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  • Can This Stock Ever Be COOL Again?

    Let's be real, Majesco Entertainment COOL looks more like Doug Neidermeyer than The Fonz these days. The big hit happened on Jan 14th when they pulled a THQ and reported terrible earnings and suspended guidance. THQ, after they did this, soon went way, WAY bankrupt (in only a way THQ could) but I'm not going to say Majesco Entertainment is there right now.

    Quick financials say Majesco Entertainment has no debt and still about $18M in cash on hand. That's a good landing spot to focus on after the fall. Before this epic fail of a earnings report, there was some optimism about the future of Majesco. And why not? Though Zumba is certainly a fad, it is still a popular fad and providing Majesco with good revenue where others (cough, Baller Beats) have failed. But there is still cause for concern.

    First of all, the old cycle of consoles is wrapping up with Microsoft and Sony gearing up for a new console war, perhaps later this year. The problem is Majesco has made no mention of making ANYTHING for future consoles. In fact, they seemed a little dumbstruck by the whole thing.

    Here is the quote to take from that article:

    "Having successfully navigated through industry transitions and periods of uncertainty in the past, we believe it is prudent to preserve our financial resources as new platforms are deployed. We plan to continue to support our established franchises, look for opportunities to reach new audiences through mobile devices, and position the company to capitalise as new platforms grow and gain consumer acceptance."

    Let me try to translate that for you:

    "Folks, we've had problems before and in those times, we learned it is good to have cash on hand. So we are going to hitch our wagon to Zumba and maybe some mobile stuff until we figure out these new console thingys."

    Basically, they have cash and will make little games and hope they can weather the storm. That is a big gamble. As I said, Zumba is still big, but all it takes is more time for a fad to fade or worse, a hot new trend could overtake Zumba. And this isn't a gamble that leads up to the holidays, they have no plans to release a big game (unless another Zumba iteration counts) during that season, which will be a killer for that quarter. People will be lining up for the new X720 or PS4 and maybe more for Wii U (there is no Zumba game for Wii U, by the way!). Majesco, as of now, looks like it has no plans for any of those consoles, except maybe downloadable games which is little revenue, at best.

    So what does this say to me? Majesco has $18m and a few months to figure out what it wants to do and then execute on that plan quickly or else they will have no money and Zumba will be an even older fad. Or, and I don't want to start a rumor, perhaps Majesco has seen some sort of writing on the wall and is interested in selling itself to the highest (or any) bidder if it comes to that.

    Although, now that I think of it, this all may have been thought of already, including a THQ connection.

    In the end, I can't be positive, bullish or even hopeful for a big Majesco turnaround any time soon. These days though, all it really takes is "one big hit" to change the sentiment. With that in mind, I give you this list of upcoming games. Do you see anything that seems COOL to you?:

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    Fiscal 2013

    To date, the Company has announced the following titles that are expected to be released during the balance of fiscal 2013:

    • Young Justice: Legacy on Xbox 360® and PlayStation®3 launches this April as part of the Company's distribution agreement with Little Orbit. Based on WB's hit animated series airing on Cartoon Network, the game lets players assemble their Young Justice team from 12 heroes including NightWing, Kid Flash, Robin and more. Track down notorious villains and be mentored by powerful superheroes as you explore, customize and battle in this action-packed, RPG styled game.
    • Phineas and Ferb (working title) for retail consoles and gaming handhelds, including smartphones and tablets, is based on the animated hit Disney television series. Additional details will be announced shortly.
    • The next iteration of the best-selling Zumba® Fitness franchise that offers players a fun and effective at home workout solution. Specific product details to be announced.

    The Company expects to announce additional details of its 2013 lineup in the coming months.

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    That sounds like a Neidermeyer lineup to me.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Feb 05 2:04 PM | Link | Comment!
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