Square Enix is getting ready to reveal financial results to investors and analysts in its quarterly presentation, and it looks like much of it will include some very bad news.
Earlier this year the company anticipated one billion yen ($12 million) in net income over the last fiscal year that ended on March 31, 2011. Unfortunately that forecast was way off base, and Square Enix now expects a 12 billion yen ($150 million) net loss over that time period.
Reasons for the revised forecast include project cancellations, such as the Highlander game and Gun Loco. Japan’s recent earthquake and tsunami troubles were also cited as key factors.
Square Enix released the following statement regarding the expected losses:
"Under a rapidly changing operating environment and more prudent estimates of future cash flows, the company plans to write down goodwill (approximately 8.8 billion).
"Further, as a result of introducing a tightened selection standard regarding title line-up to strengthen the revenue base of the company’s digital entertainment segment, project development cancellation and related losses (approximately 4.5 billion) are expected.
"Additionally, damage and losses during closures at, and restoration of, amusement facilities resulting from the Tohoku Pacific Ocean Earthquakes and Tsunami caused an extraordinary "loss on disaster" (approximately 0.6 billion)."
Square Enix is known for producing many titles each year, but the company’s introduction of a "tightened selection" of games could prove useful. Oftentimes quality is more important than quantity.
[CVG]
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