Earnings: THQ's Revenues Slump 28 Percent; Losses Mount; Lowers Guidance
This story was written by Tameka Kee.
THQ (NSDQ: THQI), developer and publisher of franchises like Saints Row, Age of Empires and Warhammer, released a dismal Q3 earnings report, said it had let go of 250 staff, and lowered guidance. It also confirmed that it is closing five studios and announced that CFO Colin Slade has taken a medical leave of absence. Rasmus van der Colff, THQ's Chief Accounting Officer and corporate controller will serve as interim CFO.
The bad : Q3 revenues were down 28 percentfrom $229.3 million in 2007, to $164.8 million in 2008. THQ's brass attributed the downward trend to having fewer releases year-over-yearafter predicting that they'd swing into profitability based on a strong line-up of games back in July.
The ugly : Factors like "lower than anticipated international sales" of the WALL-E game came pushed THQ to a net loss of $115.3 million in Q3, at a cost of $1.73 per share. That's a mind-boggling 1,542 percent increase in losses from last year's $7 million (and a negligible drop of $0.11 per share). Losses also ballooned from Q2, a trend that clearly forced THQ to reevaluate the number of studios it needed to maintain.
Getting back on track : THQ lowered guidance for the coming quarter and fiscal year, citing the strengthening dollar, pushed-back release dates for its Red
Faction: Guerrilla and Darksiders: Wrath of War games, as well as a "more cautious retail environment" as mitigating factors. They also outlined some steps for getting back on track, including: the cancellation of several upcoming titles, layoffs of about 250 people (or 17 percent of its game development team worldwide), cutbacks on administrative, marketing, sales and general expenses by $20 millionand the biggest dealcut forecasts on game development spending for the latter part of 2009 by $100 million. But there is some hope, as THQ just released Saint's Row 2, and holiday sales of the game may help prop up its Q4 numbers.
By Tameka Kee