May 30, 2007 / 11:58 AM / 12 years ago

Ubisoft eyes buys, but wants to stay cash positive

PARIS, May 30 (Reuters) - Europe’s second-largest independent video games publisher, Ubisoft (UBIP.PA), wants to stay cash positive in the current fiscal year even as it also is looking at acquisitions, its top managers said on Wednesday.

“The idea is to stay cash positive, but we remain on the lookout for acquisition opportunities,” Chairman Yves Guillemot told a news conference on the group’s 2006/07 earnings.

Chief Financial Officer Alain Martinez told Reuters after the meeting that Ubisoft was currently looking at two or three opportunities and notably at development studios.

He would not go into details but said the possible targets were in the range of 1 million to 20 million euros.

Ubisoft, which unveiled its 2006-07 earnings after the market close on Tuesday, ended the year on March 31 with a net cash position of 55 million euros ($73.8 million), which was an improvement of 120.3 million euros from end-March 2006.

This was after cash flow from operations rose by 85.5 million euros to 53.2 million due to a sharp improvement in operating income and a reduction in working capital requirements.

Martinez said Ubisoft could end the current fiscal year to end-March 2008 with a net cash position of 75 million to 95 million euros, excluding acquisitions.

Operating income was bolstered in 2006/07 by a 24 percent jump in revenue to 680 million euros in a global video games market that grew 5 percent as Ubisoft reaped the benefits of its early positioning on new generation gaming consoles.

The group made 60 percent of its revenue on the new consoles, and Martinez explained that these consoles accounted for 74 percent of Ubisoft’s gross margin, adding “this effect will be amplified” in 2007/08.

CASUAL GAMING

Ubisoft was the number one independent publisher worldwide on Nintendo’s 7974.OS Wii console with a 16.5 percent market share in the first three months of calendar year 2007.

It also ranked number two on Microsoft’s (MSFT.O) XBox 360 console and number three on Nintendo’s DS console.

Ubisoft aims for 2007/08 sales of some 800 million euros and an operating margin of at least 8 percent as it will benefit from an expected 12 to 15 percent growth in the global market, with next generation games sales growing much faster.

In FY 2007-08, Ubisoft will also have “the best (games) line-up ever”, Guillemot said.

The group is notably expanding in the casual, or games for everyone, gaming market, which should account for close to 20 percent of revenue in 2007-08 against 10 percent in 2006/07.

Ubisoft will expand its Petz line of pet simulation games targeted at children and expand it on the Wii console.

It is also launching an “Imagine” series targeted at young girls and a “My Coach” series allowing players to improve themselves and learn in an interactive way.

The 2007-08 games line-up will also reflect reinforcement of successful franchises and the launch of six new brands including Assassin’s Creed, Haze and new Tom Clancy opus “Endwar”.

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