3DO Owner Saves His Company

Did you know that Trip Hawkins had $3 million lying around? We sure didn't, but the loan will save his business from having to borrow to survive.

The 3DO Company announced today that it will accept a $3 million loan from Trip Hawkins, the outfit's founder and CEO, to meet the short-term monetary needs of the publisher through the end of the year. The announcement was included in the company's revised financial statements for 2002 and 2003, a statement which shows 3DO returning to profitability by the end of next March.

"2002 is all about cash management and product development for calendar 2003. We have now made it 75% of the way through this transition calendar year towards a strong recovery that begins next quarter," said Hawkins. "The new loan enables the Company to meet its short-term cash needs. And now that Nasdaq has given us a clean bill of health, I believe that our long-term access to capital is greatly improved."

The $3 million sum, besides helping the company pay its bills in the short term, also lets 3DO meet the requirements for a further $15 million line of credit provided by investment firm GE Capital back in July. GE required 3DO to raise $4.6 million in capital by October 1 in order to qualify for the credit line, which 3DO hasn't had to borrow any money from yet.

According to 3DO's latest predictions, the company expects to take in total revenue of $42 million to $45 million in 2002, far below previous analyst estimates of $52 million or so. This drop is chiefly due to 3DO's new policy of expanded production times and higher-quality games, meaning that they won't be releasing much until the new games come around. (We better not ask what their old policy was, then.) 2003 will mark 3DO's big return to the black, with $100 million in sales and a profit between $5 million and $10 million...according to their estimates, at least.

"We've adapted to a more demanding business climate," said Hawkins in the statement. "To use a film-making analogy, we're not the Warner Brothers of the game industry, nor do we expect to be. But we can aspire to be the Pixar or the Lucas among game publishers, using development mastery to leverage technology into our own brand upside. We believe we can have lower overhead and succeed with lower breakeven levels than the larger publishers. And with our new planning methodology and longer schedules, I believe we have as good a shot at making the big, breakout hits as anyone."

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