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Expanding Game Developer Plans Irvine Consolidation

Foundation 9 Entertainment Inc., a Newport Beach-based video game developer, said it plans to consolidate its headquarters in Irvine next year.

The company has been snapping up small, independent game developers, taking part in the industry’s consolidation.

“What we aren’t doing is a general purpose roll-up strategy,” Chief Executive Jon Goldman said. “We are looking for deals that are strategic fits.”

Two local acquisitions, Shiny Entertainment Studios of Laguna Beach and Newport Beach’s Collective Inc., soon will be combined at Foundation 9’s new Irvine office.

The company plans to move about 200 local workers into a 55,000-square-foot building near John Wayne Airport in March, Goldman said.

“We’ve got a number of employees down there, and it’s a talent based industry,” Goldman said. “That’s where they are comfortable working and we want them to stay.”

Goldman lives in Venice Beach and will commute four days a week, he said.

Previously, Foundation 9 had a “floating” headquarters, as executives traveled among studios in California, Massachusetts, Canada and Oregon.

The company’s buying spree will help to pool talent, share technology and get access to more game publishers, Goldman said.

“You need more resources to deliver games where people are playing them, and they are playing them on more platforms than ever before,” Goldman said. “There have never been so many viable gaming systems.”

Last week, the company said it planned to acquire Amaze Entertainment, a Seattle-area game maker best known for its movie-themed and handheld games.

Terms of the deal weren’t disclosed. Foundation 9 is funding the deal with its private equity owner, Francisco Partners Management LLC of Menlo Park.

Earlier this year, Foundation 9 bought the operations of Shiny Entertainment from New York-based Atari Inc. for an undisclosed amount.

The Amaze acquisition brings Foundation 9 to 725 employees at 11 game design studios.

Foundation 9 is the result of another deal in early 2005. That’s when Newport Beach-based developer Collective combined with Backbone Entertainment of Emeryville to create Foundation 9.

There are no plans for a public offering, Goldman said.

Investor Francisco Partners typically holds its investments for four to seven years, he said.


Disc Idol

Irvine’s DiskFaktory, which produces discs in bulk for software makers and others, is reaching out to amateur musicians by teaming up with an “American Idol” themed Web site.

On the site, American Idol Underground, musicians can upload their songs, get them played on one of the site’s online radio stations and have them rated by fans.

Higher rated musicians get more airplay and win awards,like on the show,but without Simon Cowell’s sharp tongue.

Fans can order CDs, which DiskFaktory makes at its 18,000-square-foot plant in Irvine.

“When you look at the whole genre of ‘American Idol,’ you are looking at people who want to get heard,” DiskFaktory spokesman Leonard Johnson said. “We are able to add the physical distribution side of it, on demand.”

Small, independent bands and aspiring filmmakers can upload their songs and videos, order CDs or DVDs and even create the artwork for the cover online.

Most disc duplicators have minimum requirements of 500 to 1,000 discs per order with about a month of waiting, Johnson said.

Would-be rock stars can place orders as small as 50 CDs or 10 DVDs at DiskFaktory’s Web site and get their discs back in as little as a day.

Companies use DiskFaktory’s site to cut printing costs by putting employee manuals and marketing brochures onto discs.

The company also makes specialty discs such as a digital business card, which has the same size and look as a paper business card and holds a company’s information and marketing pitch.

Customers such as Irvine’s Allergan Inc. use the system to share internal documents. The National Football League uses it to catalog virtual trading cards.


SEC Ends MSC.Software Probe

Santa Ana-based MSC.Software Corp. said the Securities and Exchange Commission has ended an investigation that started in 2005 without recommending any enforcement against the company.

Regulators were looking at MSC’s delay and restatement of financial results dating back to 2001 because of a review of accounting practices.

The end of the federal probe finishes a tough chapter for MSC, which develops software that manufacturers use to test their designs.

Trouble began in March 2004 with the delay of MSC’s 2003 annual report filing. MSC also said it planned to restate 2001 and 2002 results.

Then came allegations that information was withheld from MSC’s independent auditors relating to the stock option accounting for a former employee of an Asian unit. MSC’s audit committee stepped in to review the issue.

In late 2004, the review was expanded to look at whether information related to revenue accounting in the company’s Asia Pacific region was withheld.

Louis Greco resigned as chief financial officer a few months later.

More bad news came in spring 2005 when the New York Stock Exchange dropped MSC’s listing because it didn’t file its annual report for 2003.

Then, the SEC subpoenaed “certain documents” related to the company’s internal investigation of its past financial results.

MSC has made a comeback under Bill Weyand, who took over as chief executive last year.

The company’s filings are up to date and it moved from the low-profile Pink Sheets to Nasdaq.

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