JAMDAT fizzles in first inning
JMDT is now in 83 wireless carriers, in 39 countries with over 90 applications. But with all that said the company announced that only just over 20% of handsets in the U.S. are capable of downloading JAMDAT applications. Company also announced that they have just started in Europe and Asia which means don't look for too much absolute revenue from either of those markets any time soon. Company expects that almost all handsets will be capable of downloading games by 2007. Can you imagine the competitive landscape by 2007 for gaming applications? That is without considering gizmos like the PSP. Expect R&D expenses to increase as the company tries to come up with another hit like Bowling since only 20% of revenues contribute 80% of revenues.
JMDT provided guidance of 11.5% sequential revenue growth to $10.6M, where as street was looking for $12.5M revenue another disappointment. With shares already trading at very rich P/E, the lower guidance implying lower growth trajectory will certainly result in lowered estimates as well as the multiple placed on those estimates.
Few things that were clear from JMDT discussion were that gaming is no where close to being as proliferated as ring-tones and companies providing the capabilities to do mobile gaming such as QCOM providing the BREW platform are the ones making the real money right now (even though its a very small portion of their total revenues).