THQ slips into the red in fourth quarter, more pain ahead
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Video games publisher THQ Inc THQI.O slipped to a loss in its fiscal fourth quarter, as it struggled with intensifying competition, a weak market and restructuring.
THQ, which is fighting to avert a stock delisting, has been losing ground to larger rivals like Activision Blizzard Inc (ATVI.O). After a spell of weak sales, Nasdaq told the company in January it had until July 23 for its shares to close above $1 for at least 10 straight sessions, or be delisted.
Investors have since been closely watching the stock, whose shares held steady at about 67 cents in after-hours trade, from a close of 68 cents on the Nasdaq.
THQ, known for its wrestling and Ultimate fighting games, said in April it expected to lose less money in the fourth quarter than previously forecast after strong sales of Saints Row: The Third and UFC Undisputed 3.
"The bigger picture for them still looks weak as it's a scale business, and you need to have substantial revenue," Sterne Agee analyst Arvind Bhatia said.
The Los Angeles-based company is trimming staff and whittling down non-core businesses. It shut down its uDraw game tablet and exited its traditional kids' licensed games business, and also announced 240 layoffs across its various development studios.
THQ CEO Brian Farrell told Reuters the company had completed "all the heavy lifting" in its restructuring plan and did not expect more layoffs.
"It frees us up to focus on the strategy, which is these connected core experiences with a lot of digital content," Farrell said.
The company has Darksiders II and an extension to Saints Row: The Third in its 2012 product pipeline.
Bhatia said that despite THQ's efforts to cut costs and weak products, the small player faces a rough road ahead in a challenging market.
Even big publishers like Electronic Arts Inc (EA.O) and Activision have struggled to turn gamers from one-time purchasers into subscribers who generate steady revenue.
On Tuesday, THQ said its total revenue rose to $184.2 million from $124.2 million a year ago.
It posted a net loss of $53.2 million, or 78 cents per share, compared with a loss of $44.1 million, or 65 cents per share a year ago.
Adjusted for the deferral of digital revenue and other items, the company lost $8 million, or 12 cents per share, beating Wall Street expectations of a loss of 14 cents per share according to Thomson Reuters I/B/E/S. Adjusted revenue fell 31 percent to $170.7 million.
(This version of the story has been corrected to fix the CEO's name to Farrell from Fuller)
(Reporting by Malathi Nayak; Editing by Leslie Gevirtz and Richard Pullin)
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