May 5, 2008 / 9:55 PM / in 10 years

UPDATE 1-Midway Games Q1 loss widens, sees weak Q2

(Recasts, adds details, conference call)

May 5 (Reuters) - Midway Games Inc MWY.N, a video game maker, posted a wider first-quarter loss, hurt by higher product costs and other expenses, and forecast second-quarter results much below analysts’ estimates.

The company, which is controlled by Viacom Inc VIAb.N Executive Chairman Sumner Redstone, reported a loss of $34.0 million, or 37 cents a share, compared with a net loss of $19.8 million, or 22 cents per share, in the year-ago period.

Excluding the impact of stock-option expenses and other non-cash items, the company recorded a loss of 29 cents a share, below its own forecast of a loss of 21 cents a share.

“The shortfall on EPS guidance in the first quarter was primarily attributable to accelerated amortization of certain capital costs, price protection, product costs and administrative expenses,” Ryan O’Desky, interim chief financial officer, said in a conference call with analysts.

Revenue more than doubled to $29.9 million, which was offset by a three-fold rise in total cost of sales, including product costs and other expenses, to $31.6 million.

Analysts on average expected the company to post a loss of 31 cents a share, before special items, on revenue of $27 million for the quarter, according to Reuters Estimates.

For the second quarter, the company expects a loss of 28 cents a share, before items, on revenue of $18 million.

Analysts were expecting a loss of 12 cents a share, excluding special items, on revenue of $41.6 million.

The company, whose games include Mortal Kombat and Stranglehold, had fired its CEO David Zucker in March and named Matthew Booty as interim CEO.

Midway Games shares closed at $2.34 Monday on New York Stock Exchange. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Himani Sarkar)

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