International Games System Co (IGS, 鈊象電子) yesterday reported that its net income for the April-to-June quarter shrank by nearly 50 percent from a year ago, affected by lower sales of arcade games in China and a lower contribution from online games.
The results came after the company said earlier this month that its sales for last month fell to a four-year low of NT$164.76 million (US$5.49 million) and accumulated sales for the first seven months of the year declined 16.4 percent to NT$1.4 billion from the year before.
The Wugu Industry Park, New Taipei City (新北市)-based company develops and sells software and hardware for arcade games and online Web games. Arcade games sales accounted for about 62 percent of its revenue, while online games sales represented 38 percent of the total.
Based on the company’s financial filing to the Taiwan Stock Exchange, IGS posted a net income of NT$112.16 million in the second quarter, compared with a net income of NT$223.22 million a year earlier, which was 30 percent lower than the NT$160.69 million it reported for the first quarter.
Earnings per share were NT$1.61 in the second quarter, down from NT$3.22 in the same period last year and NT$2.32 in the first quarter, while gross margin rose to 81.95 percent in the second quarter from 80.20 percent in the previous year, but down from 82.55 percent in the previous quarter.
The second-quarter results are stronger than Grand Cathay Investment Services Corp’s (大華投顧) estimate of a net income of NT$107 million and NT$1.53 in EPS.
However, IGS may see its sales and profit shrink sequentially in the third quarter, because of fewer online game launches and still-weak demand for arcade games in China because of authorities’ continued seizure of illegal game machines there, Grand Cathay analyst Rickey Lin (林君曄) said in a note.
Lin said he predicted IGS would report NT$526 million in sales for this quarter, down 7.33 percent from NT$567.61 million in the second quarter, with a net income of NT$73 million and NT$1.06 in EPS.
“The demand for arcade games in China will remain weak this quarter, but is expected to return to normal after the Chinese Communist Party’s 18th National Congress in October,” Lin said.
In the first six months, IGS reported a net income of NT$272.85 million, or NT$3.93 per share, on revenue of NT$1.23 billion. That compared with a net income of NT$415.28 billion, or NT$6.03 per share, with revenue of NT$1.44 billion in the same period last year.
IGS shares fell 2.46 percent to NT$119 yesterday, which represented the lowest level since June 8, when they were traded at NT$119.6 per share. The stock has declined 41.38 percent this year, compared with an increase of 11.49 percent in the TAIEX over the same period.