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Majesco closes studios to prep for next-gen transition, writing off $1.3M in basketballs

The closing of Majesco's Foxboro, Mass. mobile development office was part of the company's plans to "preserve [its] financial resources" as new platforms enter the market, according to the company's most recent annual financial report.

Majesco has also reduced testing staff at its New Jersey office and plans to develop its mobile and social titles through its Southern California production team and outsourcing to external studios.

Earlier this month, employees of Majesco's social and mobile branch in Boston reported that the studio was shutting down. In an investor call today, the company confirmed that from a total of 40 redundancies, 14 people were laid off from the Foxboro studio along with 14 more from the company's QA testing group at its NJ office.

"We plan to continue to support our established franchises, look for opportunities to reach new audiences through mobile devices and position the Company to capitalize as new platforms grow and gain consumer acceptance," CEO Jesse Sutton said in the report.

"Our entry into the Facebook market was simply too late," he added during the company's investor call this afternoon. Despite that, Majesco will "continue to invest in freemium games business," Sutton said.

For the fourth fiscal quarter ending on Oct. 31, 2012, Majesco's net revenues total $26.6 million, 6 percent higher than its 2012 fiscal fourth quarter revenue of $25.1 million. Majesco recorded an operating loss of $3 million, identical to its loss during the same period last year. Net loss for the quarter was $2.7 million. Majesco's net loss per share, diluted and basic, for the was $0.07, compared to a basic and diluted net loss of $0.10 per share in 2012.

Majesco pointed to decreasing sales of its Wii lineup and lower than expected sales of basketball rhythm game NBA Baller Beats as lowlights from the quarter. Regarding NBA Baller Beats, Majesco says that "industry praise didn't turn into the revenue that we expected" in part due to slower sales of the Xbox 360's Kinect peripheral. Majesco says it will write off $1.3 million in basketball accessories related to NBA Baller Beats.

For the 2012 fiscal year ending on Oct. 31, 2012, Majesco's net revenues were $132.3 million, a 6 percent increase from last year. The company also reported operating income of $3.7 million and net income of $4.6 million. Basic and diluted earnings were $0.12 and $0.11 per share.

"What we're dealing with now is a different kind of consumer dynamic with free-to-play, online, and the mid[core] and hardcore world, which has grown tremendously over the last 18 months," Sutton said. "Right now, there's a real challenge in getting the consumer to spend the kind of dollars on a game that we used to take for granted."

Sutton also said that the company met revenue expectations for fiscal 2012, and ended the year with $31.3 million in combined cash and availability and no long-term debt.

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