Raiders eye up Lara as Eidos shares go into freefall after profit warning

Shares in Eidos, the computer games maker best known for Lara Croft and the Tomb Raider series, plunged 36 per cent yesterday after the group issued its second profits warning in three months.

Eidos shares closed 230p lower at 375p after the former stock-market star warned that its full-year results would be "substantially below" expectations due to lower-than-forecast sales of its computer games. The shares stood at 1,286p just six months ago.

Analysts are now forecasting a loss before exceptionals of £17.3m for the company this year. Eidos is now seen as a possible takeover target.

The company blamed the latest profits warning on the transition under way in the computer games market as consumers wait for the launch of new terminals such as PlayStation 2, which is due this autumn, and Microsoft's X-Box, which is expected next year. Games enthusiasts are holding back on buying software until the new consoles become available, the company said.

Other factors include reduced orders from retailers, which have been left with unsold games on the shelves. Margins and sales have been further depressed by aggressive pricing policies by retailers such as Dixons, Woolworths and Comet, which have been "bundling" up to four computer games free with games consoles in an attempt to shift more stock.

Eidos will now delay the launch of some of its new titles - such as Nomad Soul, F1 World Grand Prix and Daikatana - to allow time for retailers to sell off their existing supplies.

Eidos denied that some of its best-selling titles, such as Tomb Raider, are now on the wane. Mike McGarvey, the chief operating officer, said: "The titles are performing well in the charts, but the overall numbers are down." He said that sales of a top game in the UK were 10 per cent lower than at this time last year. Sales are down by 20 to 25 per cent in France and Germany, and by 20 per cent in the United States. Mr McGarvey said: "If our titles were not up there in the charts we would have to say: 'Hey, are we putting crap products in the marketplace?' But that's not the case."

He denied that the allure of the pneumatic heroine Lara Croft might be fading. "Super Mario lasted 12 to 13 years. Once you've captured the consumers' minds you can retain popularity as long as you continue to innovate," he said.

Mr McGarvey said prices were falling, with many games being sold for as little as £19.99 compared to £39.99 a year ago. Eidos is considering cutting its products as fewer customers are now prepared to pay the current premium for the group's software, much of which retails at about £29.

Kean Marden, analyst at Warburg Dillon Read, said the computer games market was going through the same cycle as it did five years ago when sales stalled ahead of the launch of new 32-bit hardware. He said Eidos could become a takeover target, with Microsoft and Infogrames of France cited as possible predators.

Eidos is raising cash by selling its holding in Opticom, a Norwegian data storage firm, for £84m.

The company issued a profits warning in January, when it blamed disappointing Christmas sales and product delays.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral