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Adobe Flash Player 10.3 enters beta before Q2 release on desktop, mobile to follow soon after that
Adobe's Flash Player 10.2 is (somewhat infamously) still absent from mobile devices, but the company is bravely promising that its brand new desktop beta of version 10.3 will be coming to both desktop and mobile devices "soon." Improvements in the latest iteration include some acoustic hocus pocus for better internet telephony, new video analytics APIs, privacy controls integrated into browser settings in Firefox 4 and IE8 (Chrome and Safari to follow), and native control panel integration with both Mac's System Preferences and Windows' Control Panel. Beta testing ends in Q2 2011 for the desktop and a mobile release should follow swiftly thereafter. As to when we'll finally be able to stop discussing which devices have or can run Flash, not even Adobe could provide us with a reliable roadmap for that.
SouthPeak posts $2.1 million quarterly loss, future uncertain
Despite reclaiming rights to the My Baby franchise last year, SouthPeak continued to decline into potential insolvency during the second quarter (ending December 31, 2010) of its current fiscal year. Net revenue for the quarter was just $7.5 million, down $2.6 million from the same period the year before -- not that the company was profitable then, either. Despite revenues being down, however, SouthPeak's total losses for the recent quarter -- $2.1 million -- were actually an improvement of $500K over second quarter losses in the previous fiscal year. (That's one way to put a kind of positive spin on the company's bleak state of affairs.) As businesses tend to do in desperate times, SouthPeak assuaged investor concerns in its report with forward-looking statements that forecast a bright future for the publisher. Though no specific projects are mentioned, apparently "SouthPeak has also invested in key new titles from which the anticipated profits should help improve its financial prospects." Of course, the report also adds a far more grim disclaimer: "While the Company is committed to pursuing options to continue to address its viability as a going concern, there can be no assurance that the Company's efforts will prove successful." Not exactly confidence inspiring, folks.
Kinect sales help drive strong holiday quarter for Microsoft, Xbox division revenue soars
For the second-straight quarter, the spotlight was on the Entertainment & Devices Division, under which the Xbox business drove slightly record-setting revenue for Microsoft in the holiday quarter (in the books as Q2 of fiscal year 2011). Profits for the quarter ending December 31, 2010, were actually slightly down compared to the same period in 2009, but spirits must be up -- we're talking about $6.63 billion in profit pocketed by Microsoft last quarter. Entertainment & Devices itself increased its revenue a staggering 55 percent in comparative year-over-year fiscal Q2 growth, pulling in $3.6 billion of the mega corporation's $19.95 billion total revenue for the quarter. "We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect," said Microsoft CFO Peter Klein. "The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations." The company added that Kinect's popularity had a trickle-down effect, boosting sales of Xbox 360 consoles and games, as well as Xbox Live subscriptions. Any impact on revenue from the launch of Windows Phone 7, however, went unmentioned.
Microsoft announces Q2 earnings: $6.63b profit, Xbox revenue up 55%, Windows down 29%
Microsoft just announced it's had itself a solid second quarter, posting an $6.63 billion profit on record revenues of $19.95 billion. That's more or less about the same as last year, when it racked up a $6.66 billion profit on $19 billion in revenue -- and while the numbers look stable and Redmond managed to slightly beat estimates, things are changing fast underneath the bottom line: strong Kinect and Xbox 360 sales drove Entertainment and Devices Division revenue up 55 percent to $3.6 billion, but Windows and Windows Live revenue fell nearly 30 percent to $5.05 billion. That means the revenue gap between Microsoft's consumer device business and the Windows business is now just some $1.3 billion, compared to $4.8 billion this time last year -- and it undoubtedly explains why Xbox got top billing at Ballmer's CES keynote this year, after traditionally being ignored, and why Microsoft is moving Windows to ARM as the mobile and tablet spaces heat up. As for Windows Phone 7, there's nary a peep, even though Microsoft was just crowing about moving 2 million licenses yesterday -- we're taking that to mean the infant OS hasn't had any meaningful impact on revenue yet. We're going to jump on the call at 5:30PM ET, we'll let you know if anything good happens. Update: Corrected the profit numbers: it's a $6.63b profit and a $8.17b operating income, not a $8.17b profit. Update 2: As noted by our friend Michael Gartenberg, Microsoft's Q210 Windows division revenue was boosted by the inclusion of $1.71 billion in deferred Windows 7 upgrade sales and OEM pre-sales, so if you take those out, the gap between Windows and Xbox went from 3.1 billion in Q210 to 1.3 billion this quarter, and Windows sales are down 8 percent. It's not a huge change for the big picture, but it's worth noting the revenue deferral in context -- Microsoft moved cash around so it would have a huge launch quarter for Windows 7, and now things are evening out.
Ubisoft's first half 2010 financials show improvement, still in the red
The first half of Ubisoft's 2010-11 fiscal year (from April 1, 2010 through September 30, 2010) showed positive growth comparatively with the company's fiscal first half of 2009-10, with sales up 57 percent to €260 million ($354.25 million) over last year. Despite the increased sales, the French publisher still spent the first six months of fiscal 2010 losing money -- €89.8 million ($122.08 million) in total. Accounting for an enormous chunk of the company's first-half loss was "studios' roles and operations reorganization," which we take to mean "we've been building and staffing up our new studio, Ubisoft Toronto." The recent closure of Ubisoft Brazil assuredly helped mitigate the expense of creating a new base of operation, though apparently not enough to keep Ubi in the black. Also to blame: Tom Clancy's HAWX 2 and Ruse both performed below the publisher's expectations, in addition to "higher R&D [research and development] than expected." CEO Yves Guillemot also explained, "The market environment continues to be tough and, although our gross profit rose sharply, the increase was lower than we expected and we had to accelerate depreciations on certain released titles." But with Assassin's Creed: Brotherhood, Just Dance 2, and Michael Jackson: The Experience all scheduled for launch in the third quarter of Ubi's fiscal year, the publisher is confident that Q3 will be profitable.
Atari sales and losses down in first half, online revenue up
The financial results for the first half of Atari's fiscal year have been released. The company reported net revenue of €29.6 million ($40.5 million) for the period, a substantial decline from the €68.5 million ($93.8 million) reported during the same period last year. Revenue was "in line with expectations" however, given Atari's new focus on "fewer but more profitable games." Speaking of profit, income has improved, though Atari isn't back in the black just yet. The company posted an operating loss of €8.5 million ($11.6 million), a considerable improvement over the €19.9 million ($27.2 million) loss during the same period last year. Atari expects income for the second half of the year to be "slightly negative to break even." Highlighting the shift toward more online and downloadable games, Atari noted that online revenue including subscription fees for Star Trek Online and Champions Online totaled €12.9 million ($17.6 million), comprising 43.6 percent of its overall revenue. During the same period last year, online revenue totaled only €1.8 million ($2.4 million), or 2.6 percent of overall revenue.
Namco Bandai cuts first half losses in FY11, Despicable Me its biggest seller
Namco Bandai recently posted its financial results for the first half of FY2011, a period running April - September. The results don't look too hot on paper -- the company's "Content" division (which encapsulates its console games branch) reported total sales of ¥7,145 billion ($879 million), while the company as a whole ended up with a net loss of ¥1.93 billion ($24 million). However, when compared to the ¥6.04 billion ($74 million) in net losses the company suffered during the first half of FY10, these figures are ... well, significantly less terrible. The company's biggest seller released in the current fiscal year was the licensed adaptation of the animated film Despicable Me, which moved 390,000 copies during the first half. Trailing close behind was Dead to Rights: Retribution at 350,000 copies sold. Imagine what kind of a sales powerhouse Namco would have on its hands if Universal ever did an animated movie about a young boy and his insatiable, murderous dog.
Mad Catz reports record Q2 sales, led by Tritton peripherals
Mad Catz is a bunch of Happy Catz today, announcing record net sales of $37.4 million in its fiscal Q2, which ended in September. That's 73.2 percent higher than Q2 of last year. Operating profit was $1.9 million -- another record, and obviously preferable to last year's negative $200,000. Xbox 360 sales accounted for the largest percentage of sales, 37 percent in all. PS3 sales grew one percent, and everything else shrunk in proportion. The biggest-selling category of items wasn't FightSticks, as might be expected, or even Modern Warfare 2-branded controllers -- it was audio products, including those made by new acquisition Tritton. Specialty controllers were the next best sellers. "While second quarter net sales benefited from initial shipments of Rock Band products and our recently acquired Tritton gaming audio line," said Mad Catz president Darren Richardson, "it's important to note that, thanks to our strong portfolio of new products across all our brands, we would still report growth for the quarter if both those product lines were excluded from our sales."
Square Enix profits down, but not out as familiar franchises keep sales alive
If you think we're going to explain that mess of scribbles above -- fuggedaboutit! What we have parsed from Square Enix's six-month financial report (April–September 2010) is a rather slight net income: ¥1.723 billion ($21.4 million). While any company would take pocket change over a loss, Square Enix profits are indeed down 36 percent from the same period last year, and software sales for the first half of this fiscal year have relied heavily on "contribution from highly profitable carryover sales of major titles released in March" -- in other words: Final Fantasy XIII picked up the slack. And who were the slackers? Square Enix highlighted five "major titles" released during the period: Dragon Quest Monsters: Joker 2 (DS) - 1.28 million units sold (Japan-only) Final Fantasy XIV (PC) - 630K units sold (worldwide) Just Cause 2 (multiplatform) - 560K units sold (worldwide)* Kane & Lynch 2: Dog Days (multiplatform) - 1.12 million units sold (worldwide) Kingdom Hearts: Birth By Sleep (PSP) - 510K units sold (worldwide)* *Title released in some regions prior to April 2010; sales only reflect those recorded in the six months ending September 30, 2010. Finally, Square Enix heralded its recent partnership with Chinese online games publisher Shanda Games; a deal indicative of two of the company's three proclaimed growth strategies: globalization and becoming "network centric." As for the third? Square Enix's three-pronged attack also stresses "strengthening our own-IPs." So when's that next Final Fantasy coming out again? [Image: Year-over-year comparison of monthly revenues from existing outlets; source: Square Enix]
THQ reports $47m Q2 loss, remains fixated on future
THQ didn't have much to say about its second quarter earnings for the period ending September 30, racking up a net loss of $47 million on net sales of $77.1 million. Compare that to a net loss of $5.6 million on net sales of $101.3 million in the prior-year period, and you can see why it wasn't very talkative. Instead, the company took the opportunity to once again point towards its future, including the December quarter launches of WWE SmackDown vs. Raw 2011 and the family friendly uDraw GameTablet for Wii ... and then it looked even further in the future, laying out its March quarter releases, including Homefront, WWE All Stars, UFC Personal Trainer and de Blob 2. But it didn't stop there! Other forward-looking highlights included the eight-year extension of the lucrative UFC business, the hiring of Assassin's Creed designer Patrice Désilets, and the high-profile fiscal 2012 lineup, including Red Faction: Armageddon, Warhammer 40,000: Space Marine, and the next Saints Row title. Hey, these turnarounds don't happen overnight, right? THQ continues down its path of high-quality (and expensive to produce!) AAA releases, but we bet it wishes there was a quicker way to get there. We'll be on the conference call hoping to learn more about what's next at THQ and tally the number of times we hear the term "transmedia."
EA cuts quarterly losses, despite declining revenue
Electronic Arts has posted its financial report for the second quarter (July–September) of its 2011 fiscal year, posting $631 million in revenue, a decline of $156 million compared to revenue recorded during the same period last year. However, the megapublisher managed to cut its net loss to $201 million -- almost half of last fiscal year's second quarter loss of $391 million. EA CEO John Riccitiello said of the company's recent performance, "We credit our results to blockbusters like FIFA 11 and to innovative digital offerings like The Sims 3 Ambitions and Madden NFL 11 on the iPad." Indeed, FIFA 11 was a golden goose for the publisher -- it was the best-selling game in Europe during the quarter, pushing the life-to-date sales of the FIFA franchise past 100 million worldwide. The publisher also revealed its "cost reduction plan," which seeks to "restructure key licensing and developer agreements to improve the long-term profitability of its packaged goods portfolio." How much more obtuse can the plan get, huh?
NBA Elite 11 canceled, series handed off to EA Tiburon
EA Sports has decided to give NBA Elite 11 the longest delay possible, updating the game's release date to never. EA's John Schappert confirmed during a recent investor's call that "we have elected to cancel NBA Elite 11." Elite had attempted to completely rework EA's basketball pedigree, abandoning the gameplay and namesake of EA's long-running NBA Live franchise. The gamble appears to have backfired, and development of the next EA Sports basketball title is being moved from EA Canada to the studio famous for Madden. "Future development of that franchise will be handled at EA Tiburon in Orlando," Schappert confirmed.
Square Enix lowers six-month financial forecast, cuts expected sales by $100M
It looks like Square Enix characters will have to hold that spiky hair with generic product, as the company lowered its earnings forecast today for the six months (first half of its fiscal year) ending September 30, 2010. The publisher reduced new sales expectations by 10.5 percent to ¥68 billion ($846 million), which is far below the ¥90.6 billion the company took in during the same period last year. Squeenix also lowered its net income expectations for the two quarters to ¥1.7 billion ($21 million), a reduction of just over 29 percent from the original forecast. The company said that the declining figures were due to the "challenging operating environment" in which new games experienced "relatively slow growth." Squeenix's operating income remains high, however, thanks to "profitable carryover sales of major titles released in March of the previous fiscal year" -- i.e., Final Fantasy 13 et al. Square Enix will release its actual second fiscal quarter results in the near future.
Sega software sales on the rise, for now
Sega Sammy's recovery continues: Despite the generally bad economy, the company is turning around -- just not at Sonic speed. For the first half of the company's fiscal year, ending September 30, 2010, sales in the Home Video Game Software division (the "Sega" you know) were up 19 percent over the same period last year to ¥18.7 billlion ($231 million). Now, imagine this group as a Russian nesting doll inside the "Consumer Business" division, which recorded net sales of ¥38.7 billion ($477.5 million; up 2.9 percent) during the first half, despite an operating loss of ¥1.3 billion ($16.1 million) -- though the full-year projection is a more rosy ¥7 billion in operating income. Three PSP games were highlighted as "Major Titles" for the period, including Kurohyo: Ryu ga Gotoku Shinsyo, a.k.a. Black Panther: New Yakuza Chapter, which sold 250,000 units; and a pair of licensed music games, Hatsune Miku: Project Diva 2nd and K-On Houkago Live, accounting for 340,000 and 210,000 units sold, respectively. Overall, total sales of 33 available software SKUs in the first half reached 6.6 million units, besting the 5.4 million mark set by 30 SKUs during the first half of the last fiscal year. However, the full-year projection -- 16 million units sold from 75 SKUs -- is significantly lower than last fiscal year's total, 26.75 million units sold (across 105 SKUs). In its report, the company said that the software industry has been "generally weak" in the US and European markets due to ... "headwind like sluggish personal consumption." The company's overview statement claims: "The Group needs to adapt to changing business environment in which the market demand for new content geared to social networking service (SNS), smartphone is expanding."
Sony sees modest PS3 growth, dramatic decline in PSP sales in Q2 versus last year
Sony Corporation has released its earnings report for the second quarter of its 2010 fiscal year, and among the highlights is the performance of its Networked Products & Services division, which is composed of PlayStation and its PC offerings. Always a strong component of the company, the division once again showed growth, bringing in ¥369 billion ($4.6 billion) in revenue, up five percent from the ¥352 billion ($4.3 billion) earned in the same period last year. Looking at hardware sales, PS3 shipments rose slightly over Q2 of FY 2009, totaling 3.5 million units versus 3.2 million the year before, a change of 9.3 percent. In its report, Sony cites "strong performance of PS3 significant hardware cost reductions and higher sales," elsewhere briefly mentioning that sales "benefited from the introduction of PlayStation Move in the current quarter." PS3 software sales were up 10 million units for the quarter, or 40 percent, totaling 35 million units versus 25 million for Q2 FY 2009. Yesterday, Microsoft announced that shipments of Xbox 360 for the first quarter of its 2011 fiscal year had grown by 25 percent over the same time last year. While it may seem like 360 is pummeling PS3, it's important to note that Sony's console hasn't seen a hardware refresh since the PS3 slim's introduction last year; the Xbox 360 S launched just prior to Microsoft's Q1 FY 2011. The picture Sony's earnings report paints for the PSP is anything but encouraging. Sales of the handheld dropped to 1.2 million units for the quarter, down from 3 million during the same period in FY 2009, a decrease of 50 percent. PSP software sales were down -- albeit far less dramatically -- 15 percent, with 11 million units sold during the quarter compared to 13 million the previous year. Despite the handheld's lower performance this year versus last, Sony is only projecting a 20 percent overall drop in sales for the year, projecting sales of eight million units versus the 10 million in FY 2009. Still, if signs of a new platform in the PlayStation Phone weren't enough to signal the end of PSP's era, these numbers only make it clearer.
Capcom first-half FY 2010 finds sales up, profits down
Capcom is gettin' by, as the publisher announced that sales were up 4.7 percent, with net profit down 39.9 percent, during the first half of fiscal year 2010, ending March 31, 2011. The publisher also announced that Jun Takeuchi can now add "Corporate Officer" to his already outrageous title of "Deputy Head of Consumer Games R&D Division and General Manager of R&D Production Department." Think that title sounds serious in English? Check it out in Japanese: 執 行 役 員CS開発副統括 兼 制作部長. Net sales reached ¥40.7 billion ($501M) during the six-month period ending September 30, 2010, thanks to the release of Dead Rising 2 and continued sales of Super Street Fighter IV. The publisher also stated that Sengoku BASARA: Samurai Heroes and Monster Hunter spin-off Monhan Nikki Pokapoka Airu Mura shipped over 500 thousands units apiece. These titles helped push that 4.7% increase in sales over the same period last year. Overall, Capcom states sales were stagnant due to the late release of Dead Rising 2 and the "substantial underperformance" of Lost Planet 2. Due to the sales issues, net profit for the first half was ¥1.7 billion ($22 million, down 39.9%). The company forecasts it'll end the fiscal year next March with sales of ¥91 billion ($1.1 billion) and a net income of ¥6.5 billion ($80 million).
Nintendo painted red in first-half fiscal year results
We'll be the first to admit it's nigh impossible to grasp the nuances of just what in the world is going on with the global economy, but things are clearly up you-know-whose creek without a paddle when Nintendo reports a ... loss?! Sure, earnings were seriously down for Nintendo during the same six-month period last year (April–September), but even then, as other companies suffered tremendous hits, Nintendo enjoyed ¥69.5 billion in profit (which was roughly $766 million by the rate of exchange a year ago). The problem is that the yen has appreciated wildly against the dollar since that time -- what was $766 million a year ago, would be more like $850 million today. In and of itself, that kind of appreciation might look spectacular, except 81.4 percent of Nintendo's sales have been overseas during the current fiscal year. When the yen is this strong, earnings on Japanese exports (sold with importers' currencies) are dashed on their way back to Japan (where they are converted back to yen). According to Nintendo's first-half report (April–Sept. 2010), "foreign currencies generated exchange losses totaling 62.1 billion yen," and, in turn, the company suffered net losses of ¥2 billion (about $24.6 million) for the period. Keep in mind, this loss comes after selling 4.07 million copies of Pokémon Black and White since September 18 (in Japan alone); 5.1 million units of Super Mario Galaxy 2; and a million-plus Wii Party games. Worldwide, DS software sales totaled 54.84 million units, while Wii games accounted for 65.21 million units sold in the first-half of the fiscal year. As for hardware, the various DS models combined to move 6.69 million units (including 2.26 million DSi and 3.21 million DSi XLs), as Wii racked up another 4.97 million units sold during the period. And did you hear? The new red Wii and DSi XL are going to be released next month to celebrate ... uh, the 25th anniversary of Super Mario Bros., of course!
Dell's Q2 2010 sees 16 percent increase in net income, flat revenue from Consumer unit
First with HP, and now with Dell. The PC maker (and occasional phone dabbler) posted its second quarter fiscal 2010 report, which actually gives a good perspective on the relative position of each company in the global PC market. Whereas the House that Hurd once ran reported a $30.7 billion revenue and $2.3 billion operating profit, Dell posted $15.5 billion (up 22 percent) in revenue and $745 million operating income. Like we said earlier, operating income shouldn't be confused with net income, which deducts those massive corporate taxes. Looking at net, the company profited $545 million, up an impressive 16 percent year-over-year. Focusing on the Consumer unit, revenue was flat at $2.9 billion, while at the same time operating income incurred a $21 million loss. According to the press release, the company "remains confident that initiatives underway will improve operating margins for the segment." Is all this enough to quell irate shareholders? Chances are slim, but hey, it's a start.
Nvidia posts $141 million loss in Q2, consumer business to blame
Graphics chip maker Nvidia has released its fiscal Q2 earnings, and while some of the more industry-oriented products – "Quadro professional graphics, Tesla GPU computing, and our Tegra system-on-a-chip business" – have delivered "excellent results" the "GeForce consumer business fell significantly short of expectations." What does that mean in dollars and cents? A net loss of $141m for Q2, down from a loss of $105m for the same period last year. It's a notable drop from the company's Q1 profits of $138m. So why were earnings down, though revenue of $811m was actually up from the same time last year? "Results were impacted by a large inventory write-down," the earnings report says. "The inventory write-down was a consequence of weakened demand for consumer graphics processing units (GPUs) as higher memory prices and economic weakness in Europe and China led to a greater-than-expected shift to lower-priced GPUs and PCs with integrated graphics." So it's the same old story: global economic meltdown leading to PC sales with cheaper – or even integrated! – GPUs. Wow, the future is bizarre.
Gartner and IDC agree: the Android invasion's accelerating around the world
Last quarter we reported on some pretty stellar growth numbers for Android in the global smartphone marketplace. Back then, Google's OS had a 9.6 percent slice of the pie, but today that's ballooned to a robust 17.2 percent, meaning that in terms of end-user sales over the last three months, Android has nearly matched RIM's BlackBerry sales. That's quite the feat when you consider that a year ago the latter was shifting ten times more units than the former. This extraordinary growth rate has narrowed down Symbian's lead at the top, in spite of Nokia's favorite OS actually shipping on more phones this year, while the big loser of the quarter has to be Windows Mobile, which contracted both in terms of market share and actual shipments. Overall, smartphone sales were up by 50 percent year-on-year, according to both Gartner and IDC, while Gartner adds that mobile devices as a whole grew at a tamer 13.3 percent pace. In terms of phone manufacturers' global share, Nokia and Samsung have held on to their top positions, LG, Sony Ericsson and Motorola have experienced some uncomfortable shrinkage, and HTC, RIM and Apple have capitalized to expand their portions. Looking over to IDC's smartphone share data shows, again, that all smartphone makers are growing remarkably well, but it does highlight HTC (129 percent) and Samsung (173 percent) as really improving their presence in the sector. The reason? Android, Android, Android.
