Mad Catz is in some financial turmoil
Isaac Newton wasn’t aware of this when he was around, but the laws of gravity can also apply to businesses and corporations. The people in charge at Mad Catz are learning that “what goes up must also come down” the hard way as the company saw the resignation of a trio of board members this week as well as announced impending company-wide layoffs.
President and Chief Executive Officer Darren Richardson, Senior Vice President of Business Affairs, General Counsel, and Corporate Secretary Whitney Peterson, and Chairman of the Board of Directors and the Audit Committee Thomas Brown all resigned from the company earlier this week. No reasons were given for the resignations but none were needed as the timing spoke for the company. Mad Catz announced the trio’s resignation the day before the company was due to announce its annual financial earnings report.
What’s in the report isn’t pretty: a restructuring plan that includes a company-wide layoff of a total of 37% of the company’s entire workforce by the fourth quarter of fiscal year 2016, hence the resignations a day prior. The company hopes to save $5.0 million dollars by the next fiscal year this way.
Other bad news in the report includes Mad Catz’ failing to reach its predicted sales forecast of its Rock Band 4 title, which it co-published with Harmonix in October 2015.
“Our quarterly net sales were the second highest in the Company’s history reflecting strong Rock Band 4 sales, which were partially offset by continuing softness in sales of our audio and PC gaming products,” explained Karen McGinnis, the company’s newly promoted President/CEO. “However, Rock Band sell-through was lower than originally forecast resulting in higher inventory balances as well as lower margins due to increased promotional activity with retailers.”
In short, too many copies of the game and its instruments in stores led to discounted prices on the items, which led to less money for Mad Catz.
Mad Catz hopes to turn its financial frown upside down with its next line of products: Street Fighter V-themed arcade FightSticks and FightPads. The company has produced official game sticks and pads for Capcom’s fighting game series since 2008.