GT seeks financial saviour to cure ills

Results Games giant appoints investment bank to explore ways to turn around sales dip.

Games giant GT Interactive will sell itself to the highest bidderurn around sales dip. after its results revealed a sales slump for the company's fourth quarter.

GT reported a loss of $91 million for the fourth quarter ended 31 March, a like-for-like dive from profit of $358,000. Sales also fell from $105.8 million to $93.5 million.

The 1998 full-year results showed that sales climbed to $572.3 million, up from $543.1 million. But the companies' loss increased to $51.8 million compared to a $29.1 million 1997 loss.

GT's reaction has been to appoint investment bank Bear Stearns, to explore recapitalisation, merger or sale opportunities for the company. It has also raised $30 million through its shareholders to finance next year's growth plan.

Thomas Heymann, chairman and chief executive of GT, believed the company would be profitable in the year 2000. 'The turnaround at GT Interactive has begun. We have made key changes to our senior management, dramatically repositioned our Frontline Publishing division, outsourced warehouse operations and are in the process of selling certain non-core assets,' he said.

The company has already earmarked its subsidiary One Zero Media for sale, classifying it as a discontinued operation.

The fourth-quarter drop in sales was attributed to the delay of five titles from Frontline Publishing, which saw the arm's sales fall by 59 per cent.

Nick Gibson, analyst at Durlacher, said: 'GT's shares have fallen to below $5, a result of three years of decline from a high of £26. That is an abysmal performance and GT has struggled.'

It will probably be bought either by a player entering the market seeking a substantial foothold or one of GT's acquisitive rivals.'

Gibson added that if the games giant is sold, a price tag of about $260 million would be expected. GT's shares on Nasdaq were hovering at $3.6, up $0.13, compared with its rivals Eidos at $34.6 and Electronic Arts at $54.

However, the company's latest big title, Driver, has done well, selling 60,000 copies over its first weekend and taking top spot in the charts.

The high figures were driven by a high street price war (PC Dealer, 30 June). The aggressive retail pricing coincided with Driver's launch on 25 June and resulted in its launch price dropping a third to £29.99.