THQ Approaches Profitability As Sales Fall In Second Quarter

Despite a considerable year-over-year sales decrease due to a lack of major game releases, publisher THQ drastically reduced its operating loss in its second fiscal quarter, moving the company towards the break-even point. Net loss for the three-month period that ended September 30, 2009 was $5.6 million, down a full 95 percent from its $115.3 million loss the same quarter in 2008. That's even as revenues fell 39 percent to $101.3 million from $164.8 million across the same time frame. With few big additions to the THQ catalogue, those revenues were driven primarily by ongoing major sellers like Yuke's' UFC 2009 Undisputed, which released two months before this financial reporting period began. The company also made further strides into the online arena both domestically and abroad, launching the North American version of Korean-developed Dragonica Online, and bringing its own Companies of Heroes Online to China and Korea. THQ said that in total across the first nine months of calendar 2009, it has been able to reach a third-place market share position in the United States, according to NPD data, and a fourth-place position in Europe, according to Chart-Track and GfK. For the full 2010 fiscal year, THQ still says it will improve revenues on a year-over-year basis as it achieves profitability, although that is likely to come after a decline in the third fiscal quarter. The company sees games like UFC 2009 Undisputed, WWE SmackDown vs. Raw 2010, and MX vs. ATV Reflex as continuing to be strong revenue drivers in the coming months. "THQ is now operating as a more focused, more efficient company," said president and CEO Brian Farrell, THQ’s president and CEO. He said the company's slate of alternative sports games leave the company "well-positioned this holiday," while the company is set to "take a leading role in emerging online platforms in Asia and the US." [Update: In an analyst conference call following the results, CEO Farrell spoke to various short- and mid-term plans and concerns for THQ. Looking at the overall console landscape, Farrell said the company is pleased with the continuing growth in installed base of all three major home consoles, although in the case of the Wii, "we are concerned about the hardware tie ratio for that platform" -- referring to the number of games consumers buy per Wii console. That ratio, which Farrell did not specify, may have an impact on THQ's substantial license-heavy kids' and family game business. Meanwhile, one of its other major areas, fighting games like UFC 2009 Undisputed, is thriving in a growing Xbox 360 and PlayStation 3 market. In particular, "we're pleased with the momentum on the PS3, and we continue to convert PS2 users," Farrell said.]