THQ posts quarterly loss, game sales weaken

By Jim Christie

SAN FRANCISCO (Reuters) - Video game publisher THQ Inc said on Thursday it swung to a quarterly loss, in line with expectations, from a profit a year ago after warning it expected disappointing sales of titles like "Stuntman: Ignition."

The net loss in its fiscal second quarter ended September 30 was $7.0 million, or 11 cents per share, compared with net income of $11.6 million, or 17 cents per share, in the year-earlier quarter.

Excluding 8 cents per share of stock-based compensation expenses, the loss was 3 cents per share, in line with Wall Street expectations, according to Reuters Estimates.

The company, based in Agoura Hills, California, posted net sales of $229.3 million, versus $240.2 million a year earlier.

A rival of Electronic Arts Inc, THQ last week lowered its second-quarter sales outlook to about $229 million from a previous estimate of $240 million amid softening sales of "Stuntman: Ignition" and "Juiced 2: Hot Import Nights."

THQ, whose recent games include "Ratatouille," also said last week it expected a second-quarter net loss of about 11 cents per share, including 8 cents per share of stock-based compensation expense. Its previous outlook was for net income of about 10 cents per diluted share.

Analyst Mike Hickey of Janco Partners said he would focus on sales of THQ's best-known games during the holiday season, such as its wrestling-themed "WWE SmackDown vs. Raw 2008" and a sequel to a game based on Pixar movie "Cars."

"It's all about 'WWE' and the ability to get something out of 'Cars 2' at retail this holiday," Hickey said in a phone interview.

THQ President and Chief Executive Brian Farrell said in a statement the company sees holiday sales providing a boost.

"While we are disappointed with our recently revised fiscal 2008 financial guidance, we expect a solid second half to drive THQ's 13th consecutive year of revenue growth," Farrell said.

He said the 'WWE' game was scheduled to release on twice as many platforms as last year.

"We have already shipped 'Cars 2: Mater-National,' a sequel to last year's top-selling family title, as well as games based on Nickelodeon's popular Avatar, Nicktoons and SpongeBob characters," he added.

On a conference call with analysts, Farrell said he expects international markets will fuel growth for THQ, which also has high hopes for a game it plans to release next year based on the movie "Wall-E" from Disney's Pixar.

THQ reaffirmed its most recent outlook for its third and fourth quarters and for its full fiscal year ending in March.

In extended trading, THQ shares were at $26.10 after ending 1.6 percent lower at $26.65 on Nasdaq -- down 27.5 percent from a high this year of $36.70 on April 13.

(Additional reporting by Scott Hillis)