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THQ Q3 Results: $56M Loss, SR3 = 3.8M, $47.7M Cash Left, [Stock Drops 30%]

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Pooya

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Aug 12, 2009
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http://investor.thq.com/phoenix.zhtml?c=96376&p=irol-newsArticle_Print&ID=1656195&highlight=

Saints Row 3.6m in Q3 (3.8m to date)
WWE12 2m

$55.9m net loss

$47.7m in cash lol

THQ said:
News Release
THQ Reports Fiscal 2012 Third Quarter Results
Company Announces Business Realignment as Part of Focused Strategy
Saints Row: The Third is Most Successful Owned-IP Launch in Company History

AGOURA HILLS, Calif., Feb 02, 2012 (BUSINESS WIRE) --THQ Inc. (NASDAQ: THQI) today reported financial results for the third quarter ended December 31, 2011.

The company recently announced its updated business strategy to exit the traditional kids' licensed video game category and focus on its core game franchises and digital initiatives. As part of this business realignment, the company is implementing plans to streamline its organization and cost structure to support what will be a smaller company positioned for sustained profitability. The company currently expects these actions will result in a reduction of selling, general and administrative expenses and product development expenditures totaling approximately $160 million from its annualized run rate.

"Saints Row(R): The Third(TM) and WWE(R) '12 demonstrate the strengths of THQ's core gaming capabilities. These titles performed at or better than the expectations we shared during our last investor conference call, driven by favorable critical reviews, community engagement and outstanding marketing efforts," said Brian Farrell, THQ President and Chief Executive Officer. "Sales of the uDraw GameTablet and related software, and other titles in the kids, family and casual category were far weaker than anticipated, substantially reducing our financial results for the quarter."

"We have since concluded an extensive review of our operations to realign our business, focusing on our key franchises with the most potential," continued Farrell. "We are implementing a plan to bring costs in line with our lower anticipated level of revenue. With our focused product plan, leaner cost structure, cash balance, and existing credit facility, we believe the company has adequate resources to execute on our plan and deliver on our strong multi-year pipeline of games."

Financial Highlights

(in millions, except per share data)

For the Three Months
Ended December 31,
2011 2010
Net Sales - GAAP $ 305.4 $ 314.6
Net Sales - Non-GAAP $ 404.4 $ 323.1
Net Loss - GAAP $ (55.9 ) $ (14.9 )
Net Income - Non-GAAP $ 24.0 $ 28.5
Diluted Loss Per Share - GAAP $ (0.82 ) $ (0.22 )
Diluted Earnings Per Share - Non-GAAP $ 0.35 $ 0.42


-Non-GAAP net sales of $404.4 million were 25 percent higher year-over-year and in-line with the company's revised guidance issued in December 2011.

-Earnings from successful games Saints Row: The Third and WWE '12 were offset by poor results for uDraw hardware and software. Lower uDraw revenue, high inventory reserves, price protection, and concessions at retail had an approximate $33.0 million impact on the company's operating income in the quarter.

-The company ended the quarter with $47.7 million in cash and cash equivalents, and no outstanding borrowings on its $50.0 million credit facility.

-A reconciliation of GAAP to non-GAAP results is provided in the accompanying financial tables, and a supplemental consolidated reconciliation can be found at http://investor.thq.com.

FISCAL 2012 THIRD QUARTER HIGHLIGHTS AND RECENT DEVELOPMENTS

Games/Market Share

-With third quarter shipments of approximately 3.6 million units (life to date 3.8 million units), Saints Row: The Third is the largest owned-IP launch in THQ's history. The company currently expects to ship between five and six million units over the life of this title.

-WWE '12 shipped more than two million units in the quarter, in line with the expectations shared on the last investor conference call. To date, WWE '12 sell-through is up 29% on like-for-like platforms in North America.

-The company announced the development of "South Park: The Game," a collaboration between THQ, South Park Digital Studios LLC and Obsidian Entertainment, Inc. This definitive South Park experience comes to life in a role-playing adventure scheduled for release in the second half of calendar 2012. The first details of the game were revealed in an exclusive cover story in Game Informer's January 2012 issue.

-THQ was the #5 publisher (#4 third-party publisher) in the U.S. in calendar 2011 with 5.4 percent market share and retail revenues up 16 percent year-over-year, according to the NPD Group, driven by the company's strength on Xbox 360(R) and PlayStation(R) 3 consoles.


Digital Highlights

-THQ's digital revenues for the third quarter of 2012 were more than double those in the year-ago quarter. Digital revenues for the nine months ended December 31, 2011 were 81 percent higher than the same period one year ago.
-Saints Row: The Third community members have created nearly 10 million characters, both in-game and via the Initiation Station. The game has also generated strong results from downloadable content (DLC) sales and is expected to be THQ's highest-selling DLC title ever.
-The Margaritaville Online cross-platform game launched on Facebook and iPad on January 25, 2012, and the iPhone companion app is coming soon. The social/mobile versions of Apples to Apples, which launched on Xbox Live(R) and PlayStation Network in December, are targeted for release on February 8, 2012.


Business Realignment

THQ announced recently that it is exiting development of traditional kids' licensed console games. The company has concluded negotiations with two licensors and is negotiating arrangements with two others. The company is also substantially eliminating its ongoing financial commitment with developers as it exits this business. Additionally, THQ has no future commitments or plans to manufacture uDraw hardware. THQ's strategy is to focus on its premium core and fighting franchises and to expand its digital revenues.

As part of this business realignment, the company is implementing initiatives to streamline its organization and cost structure. The company currently expects these actions will result in a reduction in its annualized run rate of selling, general and administrative expenses of approximately $60 million, and a reduction of its annualized product development expenditures of approximately $100 million, primarily due to its exit from the kids' licensed console games category.

Total charges related to these actions are estimated at approximately $11.0 million, of which $2.5 million are non-cash. The majority of these charges are expected to be recorded by the end of the 2012 fiscal year and will be excluded from the company's non-GAAP results.

Product Release Schedule

THQ has announced the following core releases scheduled through fiscal 2013:

Title / Platforms/Planned Release


UFC(R) Undisputed(R) 3 - Xbox 360, PlayStation 3 February 14, 2012

Darksiders(R) II - Xbox 360, PlayStation 3, PC June 2012

South Park: The Game - Xbox 360, PlayStation 3, PC Q3 FY13
Annual WWE Game TBA Q3 FY13

Metro: Last Light - Xbox 360, PlayStation 3, PC Q4 FY13

Devil's Third(TM) - Xbox 360, PlayStation 3, PC Q4 FY13



The company also has in development two unannounced core titles for release in fiscal 2013.

THQ's lineup of future titles announced for fiscal 2014 and beyond includes:

Title / Studio
Un-named Original Title - Turtle Rock Studio (external)

Dark Millennium(R) Online - Vigil and Relic
inSANE(TM) - Volition
Homefront(R) 2 - Crytek (external)
Patrice Désilets Original Title - THQ Montreal



The company also has in development four unannounced core titles for release in fiscal 2014 and beyond. The majority of all unannounced titles are company-owned IP.
 

TheNatural

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Jun 23, 2010
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Want a good example why THQ is sinking? Here's one:

http://www.gamespot.com/news/6349653.html

Selling a season pass for the UFC game for $17 for mostly completely minor things that should have been in the game in the first place, including mostly low card fighters and what I guess are scenario modes. Oh .. and this ..

"The publisher will be offering a pair of Ultimate Fight packs at launch free of charge, as well as a Create-a-Fighter Boost Pack for $3 (240 Microsoft points). The boost pack bestows players additional points for their edited characters' attributes, which THQ has said can "save an estimated 8-10 hours of gameplay.""

Wow. Just wow. Fucking ridiculous. They really expect this shit to drive digital revenue?
 

AlphaTwo00

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-THQ was the #5 publisher (#4 third-party publisher) in the U.S. in calendar 2011 with 5.4 percent market share and retail revenues up 16 percent year-over-year, according to the NPD Group, driven by the company's strength on Xbox 360(R) and PlayStation(R) 3 consoles.
Net Loss - GAAP $ (55.9 ) $ (14.9 )
Makes you wonder what #6 and on is doing.
 

TheNatural

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Jun 23, 2010
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Makes you wonder what #6 and on is doing.
EA, Activision, and Ubi Soft are top three I'm guessing. The one that isn't third party is obviously Nintendo. I'm guessing the next third party is Take Two, then probably Japanese developers like Capcom, Sega, and Namco.
 
May 18, 2010
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Saints Row: The Third is the largest owned-IP launch in THQ's history
Pretty impressive. Hopefully this allows Volition more time/budget to make SR4 what SR2 was to SR 1 (a sequel with a lot more content).
 

szaromir

Banned
Apr 26, 2006
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Between Vigil, Relic and Volition THQ have a lot of talent, so I hope they do go down anytime soon.
 

DieH@rd

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Dec 9, 2006
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Darsiders 2 novel in May, game in June.

Also, i totally forgot that Crytek is working on Homefront 2.
 

Htown

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Feb 19, 2008
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Failure of uDraw has to indicate that people may not want to have such tablet devices for home entertainment, Nintendo should be cautious.
The Wii sales of uDraw were fantastic. In 2010. It's the year-late Xbox 360 and PS3 ports that were the problem.
 

Nemo

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Sep 10, 2007
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How much do UFC games sell? I enjoyed the demo for the recent one a lot. Probably played it over 5 hours in MP
 

zomgbbqftw

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Jan 21, 2011
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The Wii sales of uDraw were fantastic. In 2010. It's the year-late Xbox 360 and PS3 ports that were the problem.
I don't really get why they bothered expanding uDraw onto PS3/360, anyone with half a brain could have told them that a game like that would fail on both platforms.
 

Htown

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Feb 19, 2008
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Year late, not have half the games that were on the Wii, and not have any new games for it either.
It's like the reverse of how publishers normally treat Wii ports. The Wii one was first, better, had more content...

THQ am Bizarro.

I don't really get why they bothered expanding uDraw onto PS3/360, anyone with half a brain could have told them that a game like that would fail on both platforms.
They did the EXACT SAME THING with deBlob. Take moderate Wii success, port sequel up to PS3 and 360. Result?

RIP Blue Tongue.
 

1-D_FTW

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Jun 14, 2006
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Yikes. Was hoping they had some Q1 projects. Metro in Q4 is looking more than a little iffy without a buyout.
 

Busty

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Aug 26, 2006
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I don't really get why they bothered expanding uDraw onto PS3/360, anyone with half a brain could have told them that a game like that would fail on both platforms.
Basically in that situation any random member of GAF could have taken the top job at THQ and done a better job.

I mean I'm all for taking a risk but betting the farm on such a high risk maneuver when the company was already in a perilous position was utter madness.
 
Jun 1, 2011
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I don't really get why they bothered expanding uDraw onto PS3/360, anyone with half a brain could have told them that a game like that would fail on both platforms.
Publishers seem to be stuck in a last-gen style of releasing games. Instead of simply targeting multiplatform games towards the consoles where they'll be most successful, a (for example) Spongebob movie game will be launched on the PS3/360 where it will more than likely lose money. If a title like that sold 300k on the Gamecube, it might have even been a mild success. Now, if a title like that sells 300k on the PS3, that's a disaster.
 

Htown

STOP SHITTING ON MY MOTHER'S HEADSTONE
Feb 19, 2008
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Also, what does it say about the industry that the #5 publisher in the US is in such dire straits?
 

Neuromancer

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Jan 13, 2009
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What about Space Marine 2?
Only in our dreams. Well it seems real unlikely, anyway:

Bilson says that he and THQ are not sure if there is "enough room" in the world for both titles, asking whether or not, maybe, Dark Millennium Online and Relic's Space Marine were "getting too close." He tells me he isn't saying that the two properties possibly sharing gameplay mechanics is the last word on the fate of a Space Marine sequel, but "it has a lot to do with it."
http://www.shacknews.com/article/70606/space-marine-sequel-dark-millennium-online-creative-overlap#
 
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