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THQ shares jump after quarterly outlook improves

THQ's stock climbs as much as 46% after the game publisher reported that it expected higher revenue and narrower losses for the three months ended March 31.

April 19, 2012|By Alex Pham, Los Angeles Times
  • THQ's fourth-quarter outlook improved, in part, because of strong sales of Saints Row: The Third, a mobster shooter franchise that shipped 4 million copies and raked in higher-than-expected revenue from sales of additional digital game content. Above, a scene from Saints Row.
THQ's fourth-quarter outlook improved, in part, because of strong… (THQ )

THQ Inc.'s shares jumped as much as 46% after the Agoura Hills game publisher disclosed that its fourth-fiscal-quarter financials would be less bleak than expected.

Bolstered by strong sales of Saints Row: The Third and UFC: Undisputed 3, THQ estimated that revenue for the quarter that ended March 31 probably would come in between $160 million and $170 million, up from the company's previous outlook of $130 million to $150 million.

In addition, the company expected narrower losses, between 10 cents and 20 cents a share, compared with earlier expectations for 35 cents to 50 cents.

The news sent THQ's shares rocketing 46% to 66 cents immediately after the announcement before they leveled off, closing at 57 cents, up 12 cents, or 27%.

Analysts noted that the stronger results help give THQ a longer lifeline by fortifying its cash pool. The company expects to report in May that it had $76 million in cash as of March 31, three times higher than previously expected, said Edward Williams, an analyst with BMO Capital Markets.

"While the company still has many hurdles to clear before it is out of the dark, it's clearly beginning the ... year in a better position than we had anticipated," Williams wrote in a note to investors.

Wednesday's news was a rare spot of sunshine for an otherwise dark chapter in THQ's 23-year history.

THQ hit a particularly rough patch last year after several big bets failed to pan out, including uDraw, Red Faction and several licensed kids' games. As the company's cash reserves have drained to dangerously low levels, THQ has laid off more than 550 people — about a third of its workforce — since August.

The company has also canceled multiple projects and shuttered six of its 11 development studios to conserve money, according to Gaming Business Review.

THQ credited the recent uptick to Saints Row: The Third, a mobster shooter franchise that shipped 4 million copies and raked in higher-than-expected revenue from sales of additional digital game content. It also said UFC: Undisputed 3, released in February, is selling better than expected, although it did not disclose sales figures for the title.

The company expected to do so May 15, when it has scheduled its fourth-quarter earnings announcement.

alex.pham@latimes.com

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