The resignations of key Mad Catz executives heralded bad news was incoming for the game peripheral manufacturer. The unhappy news came to fruition Tuesday as the company released its fiscal 2016 third quarter earnings along with a restructuring plan that sees 37 percent of its employees laid off. As expected, the big gamble co-publishing Rock Band 4 did not pay off.
CEO Darren Richardson, Chairman Thomas Brown, and Senior Vice President of Business Affairs, Whitney Peterson all turned in their walking papers yesterday. Karen McGinnis, Mad Catz’s Chief Financial Officer, was promoted to the CEO and President position.
Mad Catz did see a 114 percent increase in year-on-year sales to $65 million for the quarter ending December 31, 2015. This was primarily due to the launch of Rock Band 4 and sales of “specialty controllers” for the title. However, sales of the game overall did not meet expectations.
“Our quarterly net sales were the second highest in the Company’s history reflecting strong Rock Band 4 sales, which were partially offset by continuing softness in sales of our audio and PC gaming products,” McGinnis said in a press release. “However, Rock Band sell-through was lower than originally forecast resulting in higher inventory balances as well as lower margins due to increased promotional activity with retailers.”
As previously covered, the company issued a letter to creditors last year stating its financial stability hinged on the success of Rock Band 4. Mad Catz is the sole peripheral maker and co-publisher for the music game.
The restructuring plan that lays off 37 percent of employees is expected to save Mad Catz $5 million a year starting its 2017 fiscal year on April 1, 2016.
“Today, we are announcing a restructuring plan that we strongly believe will enable Mad Catz to be more competitive and increase our focus on operational, technological and commercial actions that will help us achieve our long-term vision. These changes will allow us to operate more effectively and help create an organization that is more agile, able to pursue growth and regain share in our core markets by simplifying our processes and reducing our operating costs, thus increasing our competitiveness and profitability without compromising the quality of our product offering.
[Image via Mad Catz]