Midway Games (MWY) continues to get Killed

Back in the day Midway Games Inc. (NYSE:MWY) the makers of Joust, Defender, Rampage and more was king of the arcade.  It looked last month that Midway was on the comeback trail but a somber Q2 report last week dropped the stock from $3.90 to $2.58.  So now what?

The huge mistake Midway made last week was not providing a full-year guidance and shareholders went into hyperspace.

Their 1 year chart looks like the landscape from Defender:

"(Midway) continues to struggle as it lacks sufficient scale, product quality, and properly targeted titles to capitalize on the current industry profile," wrote BMO Capital Markets analyst Edward Williams in a note to investors. "We also believe its cost structure is not optimized to deliver profitability within the boundaries of its current revenue."

Midway posted a loss of 38 cents per share for the quarter, matching analysts' expectations, according to a poll by Thomson Financial.

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National Amusements Inc., controlled by Viacom Chairman Sumner Redstone, the chairman of Viacom Inc. and CBS, owns more than 87 percent of Midway's shares.

Midway forecast a loss of about 37 cents per share on sales of $52 million for its third quarter, but did not give guidance for the whole year. Analysts expect revenue of $53.3 million.

"We note that the release dates for two games have slipped recently ('The Wheelman' and 'This Is Vegas') from 2008 into 2009," wrote Wedbush Morgan analyst Michael Pachter in a client note. "The company confirmed the slips, and appears unlikely to deliver as much upside revenue upside as we had modeled previously."

The holiday quarter is when video game companies make the bulk of their money for the year, so a full-year guidance provides valuable insight into a company's business.

Still, Pachter said he remains "cautiously optimistic" that Midway will do better in 2009 than it's expected to do this year _ "notwithstanding the game slips and the likely delay of a return to profitability for another year."

The analyst kept a "Hold" rating on the stock and said while he thinks Midway reached "the low point in its turnaround story quite a while ago, its path to profitability remains steep." 

Fellow Masters, best to let the dust settle and let Wall Street process this crappy news on Midway, with shares in the $2 range, there's plenty of time to get in before the stock makes it back to $3 or even $4.  Stay on the sidelines for now and if anything, wait for the company to comment on expecations for 2008/2009, without anything to go on, you can't keep plugging quarters into the machine.

SOURCE: http://money.cnn.com/news/newsfeeds/articles/apwire/3848d20c1e2e08c549553b034c46c47d.htm