Under the deal Microsoft will be the exclusive publisher of the personal computer version of Striker, the football simulation game Rage is developing with Ruud Gullit, the Newcastle United manager. The game is expected on the shelves in the autumn.
Peter Desmier, finance director, said the deal meant Rage would avoid the cost of publishing and distributing the game itself. "Having funded all our titles to this stage, we can now choose whether to publish them or not," he said. "In this case we prefer to give away some margin and let somebody else take the risk."
Striker is also likely to be published for the Sega Dreamcast and Playstation games consoles, although it is likely to be given a different name.
Rage said that in the current financial year, ending in June, it would publish six game versions for different consoles, which analysts said were likely to be based on two games. In the year to June 2000, that number is expected to double to 12.
The company said pre-tax profits this year would not be less than pounds 3.1m and would show "further significant growth" in the following 12 months.
Rage shares, which have had a rollercoaster ride in the past few years, firmed by 0.5p to 15.75p. The shares have been a favourite takeover target for investors. Mr Desmier insisted the company was not currently in talks.
Analysts, who have traditionally criticised the company for not keeping investors informed, said the profit forecast meant that the shares looked to be reasonably valued on a forward earnings multiple of less than 20.
However, they also pointed to the volatile nature of the computer games market and said that Rage would have to produce a consistent run of results before the City would be ready to take it seriously.