EXHIBIT 99.1
At eGames, Inc. At The Financial Relations Board:
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Jerry Klein Glenn Sapadin or Victor Vanov
President and CEO (212) 661-8030
(215) 750-6606 (Ext. 118)
For Immediate Release
eGames Anticipates Second Quarter Loss; Company Reduces Workforce by
25% as Part of Cost Cutting Program
Langhorne, PA - January 10, 2001 - eGames, Inc. (Nasdaq: EGAM) today announced
that the Company expects to report a loss of between $250,000 and $350,000, or
$0.02 to $0.04 per share, for its fiscal second quarter ended December 31, 2000.
This results from an approximate 11% to 13% decrease in net sales as compared to
the same quarter last year.
According to Jerry Klein, President and CEO of eGames, "Our disappointing
financial performance for our fiscal second quarter was the result of a number
of factors. Firstly, overall retail sales during the second quarter were
disappointing, in part brought on by a general softening in demand for new PCs.
Secondly, we experienced increased competition in the value-priced segment of
the consumer software marketplace as certain major software publishers initiated
price cuts on previously higher-priced products. Additionally, certain office
superstores informed us that they intend to reduce their commitment to
value-priced consumer software products following the holiday season,
necessitating increased return provisions for the quarter."
Mr. Klein continued, "We are responding to the current difficult market
environment by increasing our focus on effectively managing our cost structure.
To this end, we have reduced our workforce by approximately 25%, a move which is
expected to save the Company an estimated $150,000 per quarter. We are also
reducing our utilization of outside professional service vendors as part of our
commitment to cut our operating expenses going forward.
"Although we are disappointed with our fiscal second quarter financial
performance, we remain committed to our business plan, which is focused on
increasing the penetration and profitability of our Store-in-a-Store program,
particularly in the food and drug retail channels, and on aggressively marketing
our branded browser concept to the promotional industry. We continue to strive
to bring high-quality, value-priced, Family-Friendly(TM) software games to the
growing population of casual gamers," concluded Mr. Klein.
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eGames, Inc., headquartered in Langhorne, PA, develops, publishes and markets a
diversified line of personal computer software primarily for consumer
entertainment and personal productivity. The Company promotes the eGames(TM),
Game Master Series(TM), Multi-Pack and Galaxy of Home Office Help(TM) brand
names in order to generate customer loyalty, encourage repeat purchases and
differentiate eGames Software products to retailers and consumers. Additionally,
eGames focuses on the software needs of the mass-market consumer and develops
and implements brand marketing solutions designed to serve that consumer and the
channels where they most frequently shop. eGames - Where the "e" is for
Everybody!
Additional information regarding eGames, Inc. can be found on the Company's Web
site at www.egames.com.
Contacts: Jerry Klein, President & CEO, (215) 750-6606 (ext. 118) or Tom Murphy,
CFO, (215) 750-6606 (ext. 113)
This press release contains certain forward-looking statements, including
without limitation, statements regarding the expectation that the Company will
report a loss of between $250,000 and $350,000 for the quarter ended December
31, 2000; the expectation that the reduction in workforce will result in savings
of approximately $150,000 per quarter going forward; the Company's ability to
increase the penetration and profitability of its Store-in-a-Store Program in
the food and drug retail channels; and the Company's ability to successfully
market its branded browser concept to the promotional industry. The actual
results achieved by eGames and the factors that could cause actual results to
differ materially from those indicated by the forward-looking statements are in
many ways beyond eGames' control. eGames cautions readers that the following
important factors, among others, could cause the Company's actual results to
differ materially from those expressed in this press release: the Company's
ability to negotiate licensing arrangements with third-party software publishers
for its Store-in-a-Store program on commercially viable terms; the actual cost
savings achieved by the reduction in workforce; the Company's ability to achieve
market acceptance of its branded browser concept in the promotional industry on
commercially viable terms; the Company's ability to continue to expand the
Store-in-a-Store Program; successful sell-through of the Company's products in
all retail channels; the Company's ability to negotiate lower marketing and
promotional costs in its Store-in-a-Store and other retail relationships; the
allocation of adequate shelf space for eGames' products in major chain retail
stores; successful sell-through results for eGames' products at retail stores;
downward pricing pressure; fluctuating costs of developing, producing and
marketing the Company's products; the Company's ability to license or develop
quality content for its products; the timeliness and success of developing and
selling products; the acceptance by the market of the eGames products;
consumers' continuing demand for value-priced software; competition; the ability
to create successful strategic partnerships and implement its Internet strategy;
and various other factors described in eGames' reports, including Form 10-KSB
for the year ended June 30, 2000, and Form 10-QSB for the quarter ended
September 30, 2000, each as filed by eGames with the Securities and Exchange
Commission.
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