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THQ's 4th-Quarter Profit Beats Estimates

Earnings: Software publisher says sales of new wrestling and kids' games are driving growth.

February 23, 2001|From Reuters

Video game software publisher THQ Inc. on Thursday posted a rise in fourth-quarter profit that handily beat Wall Street's estimate and reaffirmed earnings forecasts for the rest of the year.

The Calabasas Hills-based company said net income for the quarter was $21.5 million, or 99 cents a share, compared with $14.9 million, or 72 cents a share, a year earlier.

Wall Street analysts, on average, had estimated earnings of 94 cents a share, according to data tracking firm First Call/Thomson Financial.

The positive earnings surprise helped propel THQ shares up $2.94, or 10%, to close at $30.88 on Nasdaq. That's near its 12-month high, and up from its low of $7.63.

Net sales for the quarter, which included key holiday sales, rose to $190.9 million from $127.6 million a year earlier.

Driving the growth, THQ said, were sales of new wrestling and kids' games, as well as the launch of "Summoner," its first title for Sony Corp.'s new PlayStation 2 platform.

THQ reiterated that it anticipates earnings of 2 cents to 4 cents a share for its first quarter, 12 cents to 14 cents for its second quarter, and $1.35 to $1.45 for all of 2001.

President and Chief Executive Brian Farrell told analysts in a conference call that wrestling games would slip as a percentage of total sales, from more than 50% currently, as the company focuses on other categories of games. THQ has the license for World Wrestling Federation games.

THQ will shift its focus to provide games for new platforms being launched this year--Nintendo Co.'s GameCube and Game Boy Advance and Microsoft Corp.'s Xbox--and stop producing games for Sega's Dreamcast and Nintendo 64, which are no longer being made.

At a Glance

Other Southern California company earnings, excluding one-time gains and charges unless noted:

* Los Angeles-based Herbalife International Inc., which sells dietary supplements and other products through multilevel independent distributors, said a drop in Asian sales slashed its fourth-quarter earnings by 57%. The company posted earnings of $7.5 million, or 25 cents per share, compared with $17.5 million, or 57 cents, a year ago. Sales, including the effect of allowances to distributors, declined to $226.2 million from $264.5 million a year earlier.

* 99 Cents Only Stores, the Commerce-based retailer, reported fourth-quarter income from continuing operations of $13.2 million, or 38 cents per share, compared with net income from continuing operations of $12.3 million, or 37 cents, a year ago. Sales rose 16% to $133.8 million.

* Inc., a Santa Monica-based Internet seller of mailing and shipping services, said it plans another round of cost cuts to speed profitability as its fourth-quarter loss widened. The company will reduce 2001 sales, marketing and other costs by $60 million from a year earlier, to $15 million. expects to save as much as $20 million to $25 million a year from previously announced work force cuts, the company said.

The money-losing company fired 150 workers, or 50% of its staff, this month. It cut 234 employees in October, the same month that President and Chief Executive Loren Smith resigned.

The fourth-quarter loss widened to $68.4 million, or $1.41 a share, from $33.4 million, or 91 cents, a year earlier. Revenue surged to $5.3 million from $358,000.

The company said it will take a charge during its first quarter related to the cost cuts. forecast revenue of about $23 million in 2001, little more than a third of analysts' average estimate of $64 million.

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