THQ earnings drop 11.8%, Company of Heroes Online canceled

Publisher posts $14.9 million loss for holiday quarter; WWE SmackDown vs. Raw 2011 ships 2.7 million units; uDraw ships 1.2 million; WWE Online also canned; UFC Trainer delayed; stock sinks.

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One day after Electronic Arts posted its earnings for the holiday quarter, THQ followed suit. The publisher had a rough quarter, with earnings falling 11.8% from $356.7 million to $314.6 million. The company reported a net quarterly loss of $14.9 million, down from $542,000 in profit it posted during the same period in 2009.

WWE SmackDown vs. Raw 2011 shipped 2.7 million units during the holiday quarter.
WWE SmackDown vs. Raw 2011 shipped 2.7 million units during the holiday quarter.

The loss was in part due to a $30.3 million charge the company incurred because of lowered expectations on its kids' film licenses. It also took a $9.9 million hit due to the "cancellation" of two free-to-play online properties--Company of Heroes Online and WWE SmackDown vs. Raw Online. Both games were apparently canned after "the company reevaluated its strategy of adapting certain Western content for free-to-play online games in Asian markets."

However, the Western open beta for Company of Heroes Online will remain online until March 31, when THQ will then "evaluate the next steps for the Company of Heroes series." [UPDATE] THQ has now confirmed that, along with WWE Online, the game "has been cancelled altogether."

Without the aforementioned expenses and other onetime charges, THQ would have made a quarterly profit of $28.5 million on $323.1 million in revenue. Its two biggest-earning titles during the quarter were WWE SmackDown vs. Raw 2011, which shipped 2.7 million units, and the uDraw art tablet for the Wii, which shipped 1.2 million units in North America alone. THQ plans to release the peripheral internationally during the current quarter.

Turning to the current quarter, the company lowered sales estimates to $245 million-$260 million. One reason for the adjustment was the delay of the motion-sensing exercise game UFC Personal Trainer to the company's next fiscal year, which starts on April 1.

The market's reaction to THQ's earnings report was swift and sharp. In after-hours trading, the company's share price had sunk 12.64 percent, or $0.81, to $5.60 as of press time.

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