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http://www.businessweek.com/stories/1995-05-07/nonviolent-video-gets-mugged

Businessweek Archives

Nonviolent Video Gets Mugged


Up Front: IPO TURKEY OF THE MONTH

NONVIOLENT VIDEO GETS MUGGED

YOU GOTTA HAVE GORE. THAT'S the lesson video-game maker GameTek--and its shareholders--have learned. Since GameTek went public in January, 1994, at 9, it has lost 75% in value. To be a Wall Street hit, you need a hit title. GameTek wanted to avoid the gruesome fare popular with kids. So it focused on spin-offs from shows such as Jeopardy and Wheel of Fortune. Wrong.

Since the offering, two quarters were in the red, including the vital Christmas period (loss per share: 25 cents). During the profitable quarters, the price continued to swoon anyway. The analysts' earnings consensus: GameTek will return to the black (at 10 cents) in the quarter ending Apr. 31. But that hasn't buoyed the stock either. Another snag: The entire industry is suffering a sales slowdown, awaiting speedier hardware due out this fall.

Still, GameTek says a strategy shift will turn things around. Yes, it has more grisly titles (Brutal and Quarantine). It's also launching lots of games--two per month--in hopes of finally getting a hit and staunching investors' bleeding.EDITED BY LARRY LIGHT, WITH OLUWABUNMI SHABI


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