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ORANGE COUNTY EARNINGS

Graphix Zone Attributes Loss to Signing Talent for CD-ROMs

October 07, 1995|DAN MARGOLIS | SPECIAL TO THE TIMES

IRVINE — Graphix Zone Inc. lost $4.5 million, or $1.74 a share, in the last fiscal year despite surging revenue, as the multimedia company incurred heavy costs in signing top talent to develop its new CD-ROM projects.

The Irvine company lost $567,509, or 49 cents a share, in the previous year. Revenue for the fiscal year ended June 30 climbed 58% to $3.4 million from $2.1 million.

Graphix Zone officials attributed the losses to the high development costs of its two interactive discs with rock singer Bob Dylan and the musician formerly known as Prince.

Analysts say that the music CD-ROMs, coupled with a deal with movie maker Oliver Stone to help produce an interactive disc on the life of President Richard M. Nixon, have distinguished Graphix Zone from multimedia companies that have concentrated on developing games. Last month, the company signed a deal with musician Herbie Hancock to produce a three-part CD-ROM series on the history of jazz.

"You have to go past the loss," said Eric Appell, a senior analyst with Dabney/Resnick brokerage in Los Angeles. "There is a big demand for music-and-film interactive titles."

He said that Graphix Zone's costs in 1995 to bring in the talent and infrastructure should result in multiple products in 1996.

The company would not disclose fourth-quarter results, but based on results for the previous nine months, Graphix Zone lost $2.8 million, or $1.07 a share, compared with a loss of $406,452 or 28 cents a share, a year ago. Revenue fell 18% to $692,000 from $840,000.

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