THQ Q1 losses nearly triple to $27M

By Tor Thorsen, GameSpotPosted Jul 30, 2008 5:31 pm PT

1 million WALL-Es help April-June revenues increase by $33.1 million, but ballooning development costs push Saints Row and SmackDown publisher into the red.

In the middle of a week full of earning reports from gamemakers--including Sony, Nintendo, Capcom, and Electronic Arts--THQ today opened up its financial books. For the quarter ending June 30, 2008, the company posted net earnings of $137.6 million, $33.1 more than what it took in a year ago.

THQ's increased earnings came in very large part to its game based on WALL-E, the critically acclaimed computer-animated film from Pixar. Released for the Mac, PC, DS, PSP, Xbox 360, PlayStation 2, and PlayStation 3, the game sold over a million copies as of the end of June, despite receiving only middling reviews.

WALL-E is the latest--and one of the last--Pixar tie-ins from the publisher, which has a deal that only covers two more films from the Disney subsidiary: 2009's Up! and an unnamed 2011 project. Disney will self-develop and publish the game based on Toy Story 3, due out in 2010. To keep its film tie-ins coming, THQ inked a deal with Pixar archrival Dreamworks Animation to make a game based on its 2010 offering, Master Mind.

But while WALL-E boosted THQ's revenues, the publisher's bottom line was torpedoed by the ballooning cost of making games. Citing the cost of "important improvements in our creative development organization," the Agoura Hills, California-based company reported a net loss of $27.2 million ($0.41 per share) for the April-June quarter. The shortfall is nearly triple the $9.3 million ($0.14 per share) deficit it suffered during the same quarter last year. The red ink is expected to continue during the current three-month period, for which THQ expects a net per-share loss of between $0.35 and $0.39.

Unsurprisingly, though, THQ executives are optimistic. "Our fiscal 2009 product line-up and long-term product pipeline are well-positioned to take advantage of the expanding demographic of gamers on the growing installed base of game platforms," said CEO Brian Farrell in a statement. "We have a robust product slate of key titles scheduled to launch in each of the next several quarters, starting with de Blob in September; Saints Row 2 and WWE SmackDown vs. Raw! 2009 in the holiday quarter; Red Faction Guerrilla, Darksiders: Wrath of War, and Legends of Wrestlemania in our fiscal fourth quarter; and UFC 2009 Undisputed in the first quarter of fiscal 2010."

For its overall 2009 fiscal year, which ends at the end of next March, THQ expects revenue of $1.15 billion to $1.175 billion and earnings per share of $0.80 to $0.90.

67 Comments

  • rotnem

    Posted Oct 2, 2008 1:12 pm PT

    THQ will be okay. It just needs to make sure that the above titles are launched without a hitch. Sometimes you need to lose money before you gain money. Also, they won't have to worry about production cost for said games once their launched because their launched. They'll get the money they lost, plus more. With those titles above it looks like they'll be fine, just a bit of a rough patch right now. No worries. I just hope it doesn't go under at all, or if it does, not so bad to the point where EA could buy them out. God knows we don't want them to buy out another company.

  • gangsterjc

    Posted Aug 20, 2008 7:44 pm PT

    Dident kno SR2 and RF3 were kid games...

  • ahmedbilal1993

    Posted Aug 18, 2008 1:38 am PT

    Nah.They wont cance SVR 2009. Saint rows 2 is their trump card. This might not be the end of THQ.

  • osiris

    Posted Aug 11, 2008 10:48 am PT

    they lost money this quarter, but they'll make it back with the games they have coming, just like they said. I wouldn't be worrying to much... THQ is not almost done

  • Pete5506

    Posted Aug 3, 2008 5:16 pm PT

    It sounds like THQ is almost done

  • agordplayer

    Posted Aug 2, 2008 7:42 am PT

    THQ needs to make better games than just kids games

  • PA_DUTCH

    Posted Aug 1, 2008 1:16 pm PT

    That is a shame, i really loved playing Warhammer 40k: SC on PSP

  • darkeknight

    Posted Aug 1, 2008 9:44 am PT

    With SR2 they are going to be alright.....

  • fasbas

    Posted Aug 1, 2008 8:23 am PT

    i hope they get over with there losses real soon or we wont be able to see sum good games such as SR2,RF2,SD09!

  • BigE181

    Posted Aug 1, 2008 12:14 am PT

    I hated when they has to cancel the games...i will be pissed if they cancel the SvR 09...

  • toad1956

    Posted Jul 31, 2008 10:16 pm PT

    Och! I hope they do not start cancelling games. I guess this is more proof that there has to be any easier way to port games, as long it is not a port to PC.

  • mjc0961

    Posted Jul 31, 2008 5:22 pm PT

    They'll have buttloads of money once SR2 goes on sale. I've already got my copy preordered.

  • Miteme

    Posted Jul 31, 2008 4:05 pm PT

    I'm sure all that will change when they release some anticipated next gen titles. Therefore making the next quarter higher

  • sykalob

    Posted Jul 31, 2008 2:50 pm PT

    Too Bad

  • jknight5422

    Posted Jul 31, 2008 2:01 pm PT

    This probably explains why they're having to put extra sleaze in SR2.

  • residentzombie2

    Posted Jul 31, 2008 11:35 am PT

    These quarter reports are so full of it! Why you may ask? Well it takes about 1 1/2 years to develop a game (at least a full quality one) and a quarter is 3 months. All this means is that THQ did not release any NEW bug retail games in Q1 and took a loss because they spent millions to develop the games that are still in development. Simple

  • akiwak

    Posted Jul 31, 2008 10:25 am PT

    UFC on hold till 2010? Crap I hope that they don't give up on this game at the last moment or don't put too much time into making the game. I might get SR2, I really liked Red Faction but RF2 was a big disappointment so RF3 is iffy for me. I hope THQ gives lots of love and attention to UFC because that sport is currently growing and is quickly rising to be the number one most watched sport.

  • smitherean

    Posted Jul 31, 2008 9:59 am PT

    arc_salvo, I have to partially disagree with your opinion on next-gen consoles. I own a Wii, and it is an excellent concept, but in fact it has less quality games than the other two consoles, because developing for it is even riskier, more expensive, and difficult due to the unconventional control scheme and relatively low power. The Wii is an anomaly, and if the next generation of consoles were all 'innovative' and 'revolutionary', cross-platform development would cease to exist, increasing risk and strangling sales for all games, bad news for developers and consumers alike.

  • WarPrime

    Posted Jul 31, 2008 9:59 am PT

    What are you talking about? They Published Saints Row which was awesome and Warhammer: Dawn of War. So what kind of crack are you smoking?

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