Knobias Clip Report (9-24-2007)

Sumbmited From Knobias ClipReport

MCZ: Could See Increased Sales on Halo 3 Debut

As many know, gamers have fairly deep pockets and are very willing to dig into those pockets for some of the most popular titles. The crowds that amassed for the newest Xbox a couple of years ago and the PlayStation 3 last year display the fact that when there is something new in the gaming world, the fanatics will go to any length to acquire the product.

Well, the latest product to hit the shelves will be Halo 3. Its predecessors have been the staple in the Xbox’s line of games. When Halo 2 was released in the late fall 2004, it managed $125 million in sales within a day of its arrival. Many analysts were predicting some $200 million in sales the first week for Halo 3.

The release could have a trickle down effect in the small cap space. Mad Catz Interactive, Inc. (MCZ) could receive attention from traders and possible be lumped in as a ‘Halo’ play. The Company designs and markets a full range of accessories for video game systems and publishes video game software, including the GameShark brand of video game enhancements. Mad Catz has distribution through most leading retailers offering interactive entertainment products.

In May, the Company announced that it had entered into an agreement with Microsoft to produce faceplates featuring characters from the Halo 3 video game. Currently, the Company has those faceplates for sale on its website in an accessories bundle which includes an additional controller and earpiece for $69.97 or singular for only $29.97.

The faceplates are somewhat similar to the faceplates you’ll find on cellphones which can be snapped into place with the user’s favorite team, color, or any other picture imprinted onto the phone cover. These faceplates for the Xbox also come with side stickers to fully cover the Xbox with the user’s desired theme.

The Company also recently expanded its license agreement with the NFL whereby it produces customized NFL team controllers and other accessories for the PlayStation(R)2, PlayStation 3, Xbox, Xbox 360, PSP, Nintendo DS Lite, and Nintendo Wii gaming consoles. The new agreement expands the original 2004 license agreement between Mad Catz and the NFL to allow the Company to distribute licensed products in Canada, Mexico and the United Kingdom, in addition to the U.S.

Also of note is Mad Catz latest acquisition. On September 7th, the Company reported that it had acquired assets and assumed certain liabilities of Joytech from Take-Two Interactive Software, Inc. (TTWO) for approximately $3.7 million.

Joytech had been a wholly owned subsidiary of TTWO and was one of the largest manufacturers and distributors of third-party video game accessories. All Joytech products are designed and built in-house, providing gamers with high-quality products for all the gaming consoles, as well as PCs, at competitive prices. By acquiring the Company, Mad Catz diversified its geographical locations since Joytech has its headquarters in Windsor England and could attempt to capitalize from its recent license expansion with the NFL in the United Kingdom.

In any event with the Halo 3 debut, the Company could see increased attention as a sympathy type play, though the faceplates won’t be a very large part of their overall sales. The Company has made strides becoming more geographically diverse and has cleaned up its balance sheet in past quarters, and with that in mind, investors would be wise to watch.




Visit 1800blogger to see all of our industry leading blogs