Shares in UK games software company Gremlin Group Plc slumped 27.5% to 91 pence after the board issued a profit warning. While directors expect that first-half sales will be substantially ahead of that achieved a year ago, they say it will be significantly below their original expectations. Even worse, by increasing the number of new games releases to seven in the first half, Gremlin has significantly increased sales and marketing expenses, which has squeezed margins and is likely to shrink the bottom line. The drain on resources has led Gremlin to consult financial advisers about the strategic options open to it and a money-raising option or a merger are likely to be the alternatives in an industry where small players often have a tough time financially.
