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Eidos enters drop zone
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June 13, 2000: 10:03 a.m. ET
Lara Croft creator's shares fall; raises prospect of acquisition
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LONDON (CNNfn) - U.K. computer-game maker Eidos, the company behind Tomb Raider heroine Lara Croft, warned Tuesday that business conditions for the current financial year were tough, with consumers putting off purchases as they waited for new games consoles to go on sale.
The warning sent the company's shares plunging, 44 pence, or 11.2 percent, to 357.25 pence in mid-afternoon trading in London. Two profit warnings this year have dragged the company's stock down from a high of over 1,200 pence in mid-December. Its American depository receipts rose 2 percent to $6 1/8 in New York on Monday.
An analyst in London said the stock's decline raised the prospect that Eidos could become an acquisition target, citing software giant Microsoft (MSFT: Research, Estimates), which is developing a games console called the X-Box, as a possible buyer.
 "There have been a lot of likely candidates, such as France's Infogrames (PIFG)" and Microsoft, said Julian Morse, an analyst at London stockbroker Beeson Gregory.
Regarding Eidos's profit report, "They issued timely warnings, so the results came in as expected," said Morse.
Europe's largest games software publisher said that only a one-time profit of £80.2 million from asset sales in the fourth quarter kept it from recording a loss for the three months ended March 31. Including the proceeds from the disposal, quarterly net profit rose to £36.8 million, or 35.7 pence a share, from £5 million, or 5.8 pence a share, a year earlier, as sales fell 9 percent to £52.2 million.
For the full year, Eidos fell to an operating loss of £26.8 million, from the previous year's operating profit of £39.2 million, on a 14 percent drop in sales to £194.8 million. Annual pretax profit rose to £49.3 million from £37.9 million, helped by the gains from one-time asset sales.
"We continue to experience adverse general market trading conditions," Chairman Ian Livingston said. "We see no reason to expect circumstances to improve materially before the next generation of gaming platforms have been properly established."
Eidos (EIDSY: Research, Estimates) said demand in the approach to Christmas had been weaker than expected.
The video games company is currently developing 10 games to be played on the Playstation2 console recently launched by Japanese giant Sony, and said it is working closely with Microsoft and Nintendo to support their new consoles, to be released in late 2001. 
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Eidos
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