Acclaim Shareholders Sue...Acclaim?

As you may have heard over the last few days, a group of shareholders in games developer and publisher Acclaim have filed a class-action lawsuit against the company. The complaint alleges that the company's predictions regarding its financial performance during the first three quarters of 2002 (January 11 through September 19) were "materially false and misleading," and failed to take into account circumstances at Acclaim which would inevitably lead to poor performance in the marketplace.

The suit contends that Acclaim's expectations during 2002 should have been lowered due to the following circumstances:

  • Acclaim was alienating retailers and consumers by releasing more products in larger quantities than demand required;

  • Acclaim was experiencing severe difficulties with its internal development studios, production, and testing departments;

  • Lower-than-expected demand for Turok Evolution and Aggressive Inline reduced the potential profitability of both of those projects;

  • Failings in Acclaim's retail distribution and sales tracking systems were causing it to underestimate the costs of sales returns and price concessions;

  • Mature-oriented titles such as BMX XXX were being shut out of the broadest possible retail channels.
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