THQ revenue slips, pins hopes on "Darksiders II"

SAN FRANCISCO Mon Aug 6, 2012 8:18pm EDT

SAN FRANCISCO (Reuters) - Videogame publisher THQ Inc THQI.O posted a quarterly profit compared with a year-ago loss on Monday, but revenue slipped as its new management attempts to reshape its business in a weak market.

Shares of the games maker, which recently averted a stock delisting, rose slightly to $5.01 in after-hours trade, after closing down 1.8 percent at $4.91 on the Nasdaq.

"They are in a very tough situation in a scale business and in a very competitive business," Sterne Agee analyst Arvind Bhatia said.

THQ, known for its wrestling videogames, has been losing ground to larger rivals including Activision Blizzard Inc (ATVI.O). After a spell of weak sales, Nasdaq told the company in January that it had until July 23 for its shares to close above $1 for at least 10 straight sessions, or be delisted.

The company's stockholders approved a 1-for-10 reverse share split of its common stock in late June to raise its stock price and avoid being delisted.

The company, which had been trimming staff and shutting down non-core businesses, hired a new president, Jason Rubin, in late May to grow its existing game titles, streamline its game portfolio and revive the company's prospects. Rubin is the co-founder of game studio Naughty Dog, which makes the "Uncharted" series for Sony.

"THQ has exciting IP (intellectual property), and I see great potential in our near-term slate, starting with 'Darksiders II'," Rubin told analysts on a call.

CEO Brian Farrell told analysts that the pre-orders of its action adventure game "Darksiders II" that will be launched on August 14 have "ramped nicely" and more details would be available in coming weeks.

"The litmus test is next week with 'Darksiders II'. For their mere survival, if that doesn't work then nobody's going to believe the pipeline," Bhatia said.

The company's popular wrestling title "WWE '13" is slated for an October 30 release. The company said that the expansion pack for "Saints Row: The Third" that was scheduled for next quarter has been moved to 2013.

The company will focus on its current portfolio and not to pursue casual games for Facebook, mobile games and the horror title "inSANE," Rubin said.

THQ gave up its rights to publish videogames based on the Ultimate Fighting Championship brand. Electronic Arts Inc (EA.O), which has a stable of sports titles under its EA Sports label, took over the licensing rights.

THQ said it would receive an undisclosed cash payment and shut down its studio in San Diego that handled its UFC games.

For the fiscal first quarter ended June 30, revenue dropped 32 percent to $133.7 million from $195.2 million a year ago. It posted a net profit of $15.4 million, or $2 per share, compared with a net loss of $38.4 million, or $5.63 per share a year ago.

Adjusted for the deferral of digital revenue and other items, the company lost $23.3 million, or $3.41 per share. Adjusted revenue fell 73 percent to $38.5 million.

The company exceeded Wall Street's revenue expectations of $29.3 million, according Thomson Reuters I/B/E/S. But its income fell short of the Street's view of a loss of $2.97 per share.

(Reporting by Malathi Nayak in San Francisco; Editing by Carol Bishopric, Matthew Lewis and Lisa Shumaker)