THQ Ends Lawsuit, Revises Profits
Video game publisher THQ Inc. on Monday warned that its fourth-quarter and 2003 earnings would fall far short of Wall Street expectations. The gloomy forecast send THQ stock down as much as 22 percent. THQ also announced a $10.15 million settlement of a shareholder class-action lawsuit alleging that management manipulated the company’s stock price and withheld key information from investors.
The profit warning followed similarly gloomy forecasts last week from THQ rival Activision Inc. and specialty game retailers GameStop Corp. and Electronics Boutique Holdings Corp. THQ blamed the disappointing outlook, in part, on lower-than-expected sales of its “Red Faction II” game and its portfolio of titles for Nintendo Co. Ltd.’s GameCube game console.
Like Activision last week, THQ also said retail outlets were limiting their initial orders of new games in favor of larger orders of games that have proven to be hits. Analysts and game industry executives have said this ordering pattern, while limiting inventory risk for retailers, has hurt sales of a broad swath of second-tier games.
THQ said it expects fourth-quarter earnings of 40 cents to 43 cents a share before one-time items, on revenue of $215 million to $220 million. Analysts on average were expected 93 cents per share on revenue of $263.4 million, according to research firm Thomson First Call.
For the 2003 first quarter, THQ said it expects revenue of about $50 million and a net loss of about 15 cents a share. Analysts on average had expected a loss of 11 cents a share on revenue of $54.6 million, according to First Call. THQ said insurance will partly fund the settlement of the class-action suit, brought in February 2000. But the company will take a fourth-quarter charge of $2 million.
THQ forecast full-year 2003 earnings of about 90 cents a share on revenue of $540 million. Analysts had expected $1.38 per share on revenue of $581 million. “THQ’s pre-announcement is disappointing,” Wedbush Morgan analyst Michael Pachter said in a note. “I’m most surprised about the relatively low level of (earnings per share) guidance for next year.”
Source: http://www.n-philes.com
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