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  • Cooling Down With Majesco Entertainment 6 comments
    Sep 19, 2012 2:02 PM | about stocks: NTDOY, COOL

    In my first article first article about Majesco Entertainment (NASDAQ:COOL) I was thrilled about motion-controlled games. The greatness of motion controlled gaming is that it is immersive, entertaining and, above all else, fun. Personally I am still waiting for a great sword game where you can fight as a real knight with a sword in your hands. Majesco is the right company to bring this game to millions of wannabe knights.

    Majesco's Q3 results were quite disappointing, so I sold my shares with a 12 cent loss and will wait for a better entry point. The poor results are blamed on seasonality and "challenging retail conditions for interactive entertainment." Wii game sales (61% of total) fell 60% year-over-year to $5.5 million. Majesco now expects FQ4 results to be "in the lower end" of a revenue guidance range of $130 million - $140 million and an EPS range of $0.20-$0.30.

    Personally I found those excuses weak, maybe because I am not familiar with the gaming business. A brilliant investor would say "invest in what you know". I knew the financials and I thought I could predict the future, but I guess I was wrong this time.

    I already mentioned in my former article that the company is depending too much on their Zumba Fitness franchise. Sales of Zumba products accounted for approximately 79% of Majesco's sales during the 9-month period compared with 70% a year ago. Depending on such small number of "hit" titles attracts competitors that could develop something similar or better and take away sales or reduce the ability to get a premium price.

    If their latest releases NBA Baller Beats and Mini Putt Park can turn the coin the coming quarters the stock price could run to levels of $1.75 again, but for now I am looking for a new entrance at $1. The technical picture looks very weak, so we will see what happens the coming months.

    Composite IndicatorsSignal
    Get Chart Get Performance TrendSpotter  Sell
     
    Short Term Indicators 
    Get Chart Get Performance 7 Day Average Directional Indicator  Sell
    Get Chart Get Performance 10 - 8 Day Moving Average Hilo Channel  Sell
    Get Chart Get Performance 20 Day Moving Average vs Price  Sell
    Get Chart Get Performance 20 - 50 Day MACD Oscillator  Sell
    Get Chart Get Performance 20 Day Bollinger Bands  Sell
     
    Short Term Indicators Average: 100% Sell
    20-Day Average Volume - 258,771
     
    Medium Term Indicators 
    Get Chart Get Performance 40 Day Commodity Channel Index  Sell
    Get Chart Get Performance 50 Day Moving Average vs Price  Sell
    Get Chart Get Performance 20 - 100 Day MACD Oscillator  Sell
    Get Chart Get Performance 50 Day Parabolic Time/Price  Sell
     
    Medium Term Indicators Average: 100% Sell
    50-Day Average Volume - 201,320
     
    Long Term Indicators 
    Get Chart Get Performance 60 Day Commodity Channel Index  Sell
    Get Chart Get Performance 100 Day Moving Average vs Price  Sell
    Get Chart Get Performance 50 - 100 Day MACD Oscillator  Sell
     
    Long Term Indicators Average: 100% Sell
    100-Day Average Volume - 274,314
     
    Overall Average: 100% Sell
     
    PriceSupportPivot PointResistance
    1.361.461.561.66

    Detailed Opinion as of Monday, Sep 17th, 2012

    Source: www.barchart.com

    Final Note

    Last week, NBA Baller Beats was launched as the first-ever full body motion-based NBA licensed video game that lets you perform like a pro using a real basketball. At Amazon it received already some good reviews. I think this game could become a "hit" title too, just like their Zumba Fitness franchise.

    The holiday period will be crucial for the company's future, especially because Nintendo's "Wii U" will hit US store shelves on November 18 and aims to lure gamers back from the internet and mobile devices.

    The Wii U will allow users to make personal TV and video programming lists and record shows through TiVo and other digital recording services.

    For Nintendo, known for its game-centric approach, adding an entertainment component is a positive step, said Billy Pidgeon, an analyst at M2 Research. "It's a must-have right now and with this, they can catch up somewhat to Microsoft's Xbox offerings."

    The Wii U is the first console machine to be sold by a major gaming industry company in more than six years. With a new Microsoft Xbox and updated Sony Playstation expected in 2013, sales will offer clues as to whether more advanced, next-generation game hardware can boost the ailing video game console and packaged games market.

    The Wii has been a bonanza for Nintendo (OTCPK:NTDOY), with 100 million sold, but demand is waning. In the three months to June 30, Wii sales more than halved to 710,000 from 1.56 million a year earlier.

    For Majesco Entertainment the last quarter of 2012 and the year 2013 are important because it could lead to unexpected high growth numbers if gaming fans start to embrace the video game console market again.

    The company's current line-up of interesting new games such as NBA Baller Beats could bring renewed interest in the stock again. If sales succeed expectations investors are going to jump on the bandwagon again.

    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.

    Themes: short-ideas Stocks: NTDOY, COOL
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Comments (6)
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  • gekko13
    , contributor
    Comments (69) | Send Message
     
    I went to a Gamestop today here in Miami to find out how Baller Beats was doing. I asked the manager and she said that they have only sold ONE. Out of curiousity, I asked her how Zumba was holding up. She said she couldn't remember the last time she sold one. So now here I am sitting on several thousand shares at an average price of 2.15 regretting the day I bought this POS.

     

    And what really gets my goat is that the company is not really giving Baller Beats any real support. No advertising during the NFL games promoting the game, no visible displays at the Gamestop. A couple of the other NBA games had impressive displays put up.

     

    What a joke of a marketing team...
    19 Sep 2012, 04:57 PM Reply Like
  • stephanmanus
    , contributor
    Comments (97) | Send Message
     
    yes, the holiday season is important for all game company. I would not overstress the summer quarter. Majesco seems to be well positioned. The sell off was overdone, simply because the consensus is at 29c for 2013, majesco did hold up well in 2012 and all products will be out well in advance before the season starts.

     

    apart from that majesco enters the season with almost $mil 8 less captialzed sw (=20 cents per share)...that alone should let the earnings rock assuming flat sales...assuming analyst consensus sales projections=growth we will have a turbo earnings effect.

     

    the wii U is important and will launch with Zumba. Zumba was at million 3 units a year ago, is now at mil 8 units and will easily exceed the mil 10 units before year end. dont forget that even zumba 1 is selling remarkably well and all 4 zumbas are in the bestseller charts.

     

    a pe of 3.5 is not justtified for a growing, well established, profitable company imo....net of cash that means a pe of 1...
    20 Sep 2012, 03:29 AM Reply Like
  • Dutch Trader
    , contributor
    Comments (1118) | Send Message
     
    Author’s reply » http://amzn.to/RNvCFb

     

    Great reviews but not a TOP-100 listing on Amazon.
    9 Oct 2012, 02:34 PM Reply Like
  • Brian7992
    , contributor
    Comments (7) | Send Message
     
    WOW! I am sitting here holding 13000 shares of this stock averaged out to about 1.62. I have decided to hold on and wait for a rebound. A positive change in global economic conditions as well as new products and a sound balance sheet make this a HOLD for me, at least for the next 6 to 12 months! If the price drops below 1 I will reconsider my position. I still expect to get 3 something a share when I sell!
    12 Oct 2012, 06:52 PM Reply Like
  • alvogtpdq
    , contributor
    Comments (2) | Send Message
     
    Has anyone hear any news on COOL lately. Today it has taken a nosedive to .90 per share!
    1 Nov 2012, 07:26 PM Reply Like
  • Dutch Trader
    , contributor
    Comments (1118) | Send Message
     
    Author’s reply » No, I guess we have to wait for the quarterly results.
    2 Nov 2012, 02:58 AM Reply Like
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