Slumping Sales to Slam THQ

THQ Inc. on Monday slashed its sales outlook and said it would report a loss for the second quarter while lowering its view for the rest of the year amid softer-than-expected sales of two of its video games and plans to delay the release of certain other games. "We are disappointed that our latest editions of Juiced and Stuntman did not perform to expectations," said CEO Brian Farrell. "Because of THQ's commitment to delivering quality products, we have moved the PS3 and Xbox 360 versions of Destroy All Humans!, and the PS3 version of Frontlines into fiscal 2009. We believe the additional time will enable us to create the best products for our customers." Against that backdrop, THQ said it now expects a second-quarter loss of $0.11/share, or $0.03/share excluding items, on sales of $229M, down from its previous guidance for earnings of $0.10/share on sales of $240M. Looking ahead, it sees earnings of $0.61/share ($0.67 adjusted) on sales of $490M for the third quarter and $0.19/share ($0.25 adj.) on sales of $240M for the fourth quarter. For the year, it expects to report earnings of $0.56/share, or $0.08 excluding items, on sales of about $1.06B, down from its prior outlook for profit of $1.34-$1.44 on sales of $1.12B-$1.5B. Analysts had been expecting earnings of $0.10/share excluding items on sales of $237M for Q2, earnings of $1.02 on sales of $521.4M for Q3 and earnings of $1.36 on sales of $1.13B for the fiscal year. Share fell 3.5% to $23.05 in extended trading Monday.

Sources: Press release, AP
Commentary: UBS Downgrades THQ On Weak Sales Of New Titles • Citigroup, Credit Suisse Get Bullish On Video Games
Stocks to watch: THQI. Competitors: ATVI, ERTS. ETFs: IGV
Earnings call transcript: THQ F1Q08 (Qtr End 6/30/07)

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