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4Kids stalls in Q3

By Staff -- Gifts and Dec, 11/9/2007 12:28:00 PM

NEW YORK—Children’s programmer and licensor 4Kids Entertainment saw its financial fortunes fall in 2007’s third quarter, with revenue down and a larger loss, as it geared up for the launch of its self-created Chaotic property.

Net revenues in the third quarter of 2007 totaled $12.2 million from continuing operations, down from $17.6 million for the corresponding period in 2006. The company’s net loss for the quarter was $4.2 million, or $0.31 per diluted share, as compared to a net loss of approximately $265,000, or $0.02 per diluted share, in the same period in 2006.

The company has a similarly down performance in 2007's second quarter, hampered by start-up costs associated with Chaotic's development and the company's digital entertainment efforts.

Year to date through Sep. 30, 2007, 4Kids’ net revenues totaled $39.1 million from continuing operations compared to $53.5 million for the same period in 2006. The company’s net loss for the year’s first nine months was $6.6 million, or $0.50 per diluted share, compared to net income for the first nine months of 2006 of $1.3 million, or $0.10 per diluted share.

“While we are disappointed by the financial results so far this year, we believe that we have taken important steps to strengthen our business for 2008 and beyond,” said Al Kahn, 4Kids chairman and CEO. “On October 24, 2007, we released the highly anticipated Chaotic Trading Card Game to comic and hobby stores nationwide and launched the public beta version of the Chaotic website, www.chaoticgame.com. We expect sales of the Chaotic Trading Card Game to the comic and hobby channel to contribute to revenues in the fourth quarter."

Beginning in the first quarter of 2008, the Chaotic Trading Card Game will be distributed to the mass market.

"Chaotic represents a potentially dramatic shift in our business model as we will be able to add the gross revenues and profits from the distribution and sale of trading cards to the revenues from our share of the royalties that we receive in our traditional licensing business,” said Kahn.

Last month, the company announced a new five-year broadcast deal with The CW Network, under which 4Kids will provide children's five hours of programming on Saturday mornings beginning in the 2008-09 broadcast season. It’s an agreement, Kahn said, would “drive greater exposure for our hit properties and provide us with the opportunity to build ratings and increase advertising revenues over the long-term.”

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