THQ Posts $35.3 Million Loss; 200 Jobs to be Cut

thqIn 2007, THQ raked in a whopping $38 million in earnings, but unfortunately for the company, this year they have reported a loss. A $35.3 million loss to be exact.

According to THQ President and CEO Brian Farrell:

“In fiscal 2008, we did not achieve our revenue and profit targets and we are taking aggressive steps to ensure that we significantly improve execution in fiscal 2009 and beyond. Going forward, we are focused on three key initiatives. We are rolling out a stronger slate of products. We have put in place and are executing against initiatives to improve our product quality and competitiveness. We are also realigning our cost structure to generate significant operating leverage in fiscal 2009. We believe these initiatives will restore profitable growth and improve value for shareholders.”

In addition, according to GamesIndusrty.biz, THQ’s Colin Slade has announced that some restructuring will occur, and unfortunately that will lead to the loss of 200 jobs at THQ.

“In terms of the restructuring action in the near term we’re probably going to be taking at about 200 headcount. However, over the course of the year, we do expect to see overall headcount growth from around 2,400 as we exit this fiscal year to under 2,700 at the end of next fiscal year.”

Bad news for THQ, but hopefully the restructuring they are planning will help them out. You can read the full press release after the jump which is full of figures, quotes and other interesting financial wording. If you plan on reading it, you may want to fix yourself a pot of coffee to stay awake.

Via: Press Release; GamesIndustry.biz

THQ Reports Fiscal 2008 Fourth Quarter Results

AGOURA HILLS, Calif. – May 6, 2008: THQ Inc. (NASDAQ: THQI) today announced financial results for the fourth quarter and fiscal year ended March 31, 2008, and provided its financial outlook for the first quarter ending June 30, 2008, and fiscal year ending March 31, 2009.

For the twelve months ended March 31, 2008, THQ reported net sales of $1,030.5 million, compared with $1,026.9 million in the prior year. On a non-GAAP basis, the company reported fiscal 2008 net sales of $1,061.0 million, which excludes the effects of deferred revenue from Frontlines TM : Fuel of War TM . Fiscal 2008 marks the company’s 13th consecutive year of revenue growth.

For the fiscal year ended March 31, 2008, the company reported a net loss of $35.3 million, or $0.53 per share. In the prior year, the company reported net income of $68.0 million, or $1.01 per diluted share. On a non-GAAP basis, excluding stock-based compensation and the effects of deferred revenue and costs of Frontlines: Fuel of War, the company reported a fiscal 2008 net loss of $13.6 million, or $0.20 per share. In fiscal 2007, the company reported non-GAAP net income of $84.0 million, or $1.24 per diluted share, which excluded stock-based compensation. THQ’s GAAP and non-GAAP net (loss) income for fiscal 2008 and fiscal 2007 includes a $1.5 million and $3.1 million, respectively, gain on discontinued operations from the sale of Minick AG.

“In fiscal 2008, we did not achieve our revenue and profit targets and we are taking aggressive steps to ensure that we significantly improve execution in fiscal 2009 and beyond,” said Brian Farrell, THQ president and CEO. “Going forward, we are focused on three key initiatives. We are rolling out a stronger slate of products. We have put in place and are executing against initiatives to improve our product quality and competitiveness. We are also realigning our cost structure to generate significant operating leverage in fiscal 2009. We believe these initiatives will restore profitable growth and improve value for shareholders.”

For the fourth quarter of fiscal 2008, THQ reported net sales of $187.0 million, up from $172.1 million for the same period a year ago. On a non-GAAP basis, the company reported net sales of $217.6 million, which excludes the impact of deferred revenue from Frontlines: Fuel of War on both the Xbox 360 ® and Windows PC platforms.

Fiscal fourth quarter net sales, which exceeded prior guidance, were led by Frontlines: Fuel of War, MX vs. ATV TM Untamed TM and WWE ® SmackDown ® vs. Raw ® 2008. The company stated that MX vs. ATV Untamed and WWE SmackDown vs. Raw 2008 exceeded expectations, and Frontlines: Fuel of War met expectations, during the quarter. However, the company experienced weaker-than-expected sell through of some of its previously released titles, which resulted in greater-than-anticipated price protection and reserves, as well as increased software amortization expense during the quarter.

As a result, for the fourth quarter of fiscal 2008, the company reported a net loss of $34.5 million, or $0.52 per share. For the same period a year ago, THQ reported net income of $6.5 million, or $0.09 per diluted share. On a non-GAAP basis, the company reported a fiscal fourth quarter net loss of $24.8 million, or $0.37 per share, excluding stock-based compensation and the effects of deferred revenue and costs of Frontlines: Fuel of War. For the same period a year ago, the company reported non-GAAP net income of $10.1 million, or $0.15 per diluted share, which excluded stock-based compensation. THQ’s GAAP and non-GAAP net income for the fourth quarter of fiscal 2007 includes a $973,000 gain on discontinued operations from the sale of Minick AG.

A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.

“We believe our stronger fiscal 2009 product line-up is positioned to take advantage of the expanding demographic on the growing installed base of new gaming systems,” said Farrell. “Our line-up is anchored by Saints Row TM 2 and Red Faction ® Guerrilla TM , sequels to two of our most successful original franchises. We have a strong slate of new original titles developed specifically for the Nintendo Wii platform. We are introducing two new promising original brands, de Blob TM and Darksiders TM . And, we plan to launch new games based on our proven annual franchises: WWE SmackDown vs. Raw 2009, Disney/Pixar’s Wall-E and a portfolio of Nickelodeon titles.”

Farrell continued, “As part of our strategy of managing some of the biggest brands in entertainment in the video game category, we are thrilled with our new relationship with DreamWorks Animation. DreamWorks Animation is one of the most proven brands in entertainment based on their exceptional creative talent and box office success. We’re also excited about launching our first games based on the Ultimate Fighting Championship in spring of next year in conjunction with a prime UFC event. And importantly, the new WWE Legends of Wrestlemania game next March is a great addition to our portfolio.”

Fiscal 2009 Guidance

THQ issued initial guidance for the first quarter ending June 30, 2008, and fiscal year ending March 31, 2009, which excludes the effects of deferred revenue and costs, stock-based compensation and restructuring costs, as follows:

* For the fiscal year ending March 31, 2009, THQ expects net sales in the range of approximately $1,175 million to $1,200 million and operating margins in the high single digits, resulting in earnings per diluted share in the range of approximately $0.95 to $1.05.

For the fiscal first quarter ending June 30, 2008, THQ expects to report net sales in the range of approximately $115 million to $125 million and a net loss per share in the range of approximately $0.38 to $0.42. The anticipated loss reflects a light product release schedule and the timing of expenses.

Fiscal 2008 Highlights and Recent Developments:

* The company recently strengthened its portfolio of licensed franchises with the addition of:

o

o a new relationship with DreamWorks Animation to publish games based on the studio’s 2010 fall animated feature film; and

WWE Legends of Wrestlemania, which is scheduled for the fourth quarter of fiscal 2009.

* The company enhanced its offering of online and casual games with the addition of:

o

o a co-publishing agreement with Shanda Interactive Entertainment Limited to bring Company of Heroes Online to the Chinese market in fiscal 2009; and

the acquisition of Elephant Entertainment.

* * THQ unveiled an extensive line-up of new original games designed specifically for the Nintendo Wii, including de Blob, Deadly Creatures TM , Big Beach Sports TM and All Star Cheer TM .

THQ strengthened its Studio System with the acquisition of Big Huge Games and the appointment of two new executives to help drive improved product development execution and new intellectual property creation.

Fiscal 2008 Sales Achievements:

* THQ shipped 6 million units of WWE SmackDown vs. Raw 2008, driving THQ’s third consecutive year as the #1 fighting publisher, with a 33% market share in the US, according to the NPD Group.
* Lifetime shipments of THQ’s games based on Nickelodeon and WWE each surpassed $1 billion.
* THQ shipped more than 1.5 million units of the #1 off-road racing game, MX vs. ATV Untamed, bringing life-to-date franchise shipments to 6.5 million units.
* THQ established two new original franchises: Frontlines: Fuel of War and Drawn to Life TM .

THQ’s international net sales increased significantly, to 51% of total global net sales from 42% a year ago, as THQ continued to execute onits international growth strategy.

During fiscal 2008, the company repurchased $54.9 million of common stock. The company currently has $28.6 million authorized and available for repurchase.

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3 Comments on THQ Posts $35.3 Million Loss; 200 Jobs to be Cut

ManOfTeal

On May 7, 2008 at 8:38 am

Stephany, I don’t know where you have been but I’m glad to see you are back, missed ya kiddo. :wink:

That sucks about THQ, they have been around for a long time and you hate to see an old guy fall on such hard times….hoe things will turn around for them.

Go Marlins!!!!

Ron Whitaker

On May 7, 2008 at 9:20 am

Man, how’d she get out again? I’m going to have to spend more money on security. GUARDS!!

Stephany

On May 7, 2008 at 9:56 am

Speaking of your guards Ron, your money is nothing compared to my charms. :wink:

Thanks for the welcome back ManofTeal. :smile:

I moved and was without internet or a phone for over a week. Damn AT&T/Bellsouth. I should sue them. :twisted: