Analyst Lowers THQ Estimates As Key Franchises 'Decline'

THQ is aiming to break even in its fiscal 09 -- but it's likely to miss its target, says Cowen Group analyst Doug Creutz, because the performance of its key franchises is on the decline. Those franchises include the WWE licensed titles. Creutz believes the latest of these, the Yuke's-developed Smackdown vs. Raw 2009, saw unit sales decline 22 percent year over year in the December quarter. Another key property for THQ, the SpongeBob franchise, was down 19 percent year over year, according to the analyst's data. "The WWE decline is particularly concerning since that franchise had been one of THQ's last bastions of strength," says Creutz. And its unit decline is occurring even as the latest title receives "meaningfully improved" critical reviews over its predecessors. At the same time, Saints Row 2 is not likely to break 1 million units in its first year despite being released on both platforms, Creutz believes, likely to top out at 900,000 in the U.S. The original Saints Row sold 750,000 units in its first year despite being launched on only one platform, the Xbox 360, at an earlier point in the console cycle. Because of all this, Creutz says THQ's losses in 2009 are expected to be "more substantial," and Cowen Group reduced its estimates for the publisher's third quarter from 11 cents per share to breakeven -- and for its fourth quarter, from a loss of 14 cents to 20 cents.