By Malathi Nayak
SAN FRANCISCO Nov 5 THQ Inc narrowed
quarterly losses but failed to arrest a revenue decline after
its marquee "Darksiders II" title fell short of expectations in
a sluggish video games market.
The company, which had trimmed staff and shut non-core
businesses in an effort to revive the business, sold just 1.4
million units of the action-adventure game since its August
launch, far short of a break-even target of 2 million.
On Monday, executives said they were pushing back the
release of key titles such as its "South Park" game that were
not yet ready for primetime - a postponement that will increase
the company's need for capital.
THQ has hired Centerview Partners LLC to help it evaluate
financing and "strategic alternatives" to raise capital and
improve liquidity, but executives did not elaborate on what
options were on the table.
"The new release timing and our limited financial resources
had created a need for additional capital," Chief Executive
Brian Farrell told analysts on a conference call, in which he
and other executives chose not to field questions.
THQ also has $100 million in convertible notes that are due
in August 2014.
Potentially fuelling uncertainty, the company on Monday
suspended earnings guidance and withdrew its previously given
outlook for fiscal 2013.
THQ, known for its wrestling videogames, has been losing
ground to larger rivals including Activision Blizzard Inc
. 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.
On Monday, the company announced that the spring 2013 launch
of "South Park: The Stick of Truth", based on the popular
animated television series, was postponed to fiscal 2014.
The releases of strategy game "Company of Heroes 2" and
first-person shooter "Metro: Last Light", expected in March,
have also been delayed.
That leaves the company without a tentpole title for the
holidays apart from its just-launched "WWE '13" title, and the
underperforming "Darksiders II".
"'Darksiders II' did not perform to our expectations or live
up to its generally favorable reception," THQ President Jason
Rubin told analysts on the earnings call.
Rubin was brought on board this summer to focus on
high-quality titles, streamline the product pipeline and
reignite its prospects. Rubin is the co-founder of game studio
Naughty Dog, which makes the "Uncharted" series for Sony Corp
The company said total revenue dropped to $91.8 million from
$119.6 million a year ago. It posted a net loss of $12.1
million, or $1.76 per share, compared to a net loss of $46.9
million, or $6.86 per share, a year ago.
Wall Street analysts on average had expected the company to
report a net loss of $3.47 per share, according to Thomson
Reuters I/B/E/S. The company also exceeded Wall Street's revenue
expectations of $84.26 million.
Ahead of the earnings report, shares of the games maker rose
5.6 percent to close at $3.02 on the Nasdaq. After-hours trade
was halted pending the results.