THQ Faces $192 Million Loss, Plans 600 Layoffs
Publisher THQ's sales plummeted in its third quarter, opening up $191.8 million in losses -- and prompting the publisher to plan a 24 percent staff reduction, eliminating 600 positions.
The company's revenue dropped 30 percent to $357.3 million, missing analyst estimates. With the disappointing announcement came the news that Paul Pucino would replace Colin Slade, who is on medical leave, as the company's chief financial officer.
The poor performance comes in the face of what the company defines as meaningful improvements in its product portfolio. Over the fiscal year, the company's Saints Row 2 shipped 2.6 million units and achieved an average Metacritic rating of 82. Its WWE SmackDown vs. Raw 2009 has shipped more than 4 million units to date, according to THQ's data, with an average Metacritic rating of 80.
Wii exclusive De Blob, rated 81, has shipped 700,000 units to date, and Big Beach Sports has shipped more than 1.2 million units, although the company did not provide sell-through figures for any of its games.
"We delivered high quality games to market this holiday season but fell short of our revenue and profit targets in this challenging environment," says THQ president and CEO Brian Farrell, who nonetheless says the strong performance of established franchises and new IP both "give us confidence in our strategy going forward."
The company says it's now implementing a "highly targeted" plan to return to profitability, planning on "investing in games with the highest franchise potential."
The company has already executed a $120 million cost reduction, and hopes that its new cost-cutting initiatives will save an additional $100 million.
In the coming months, the company plans to launch Warhammer: Dawn of War II, WWE Legends of WrestleMania, and its first games based on the Ultimate Fighting Championship franchise, and Red Faction: Guerrilla, but did not specify release windows.
"In this environment, we are focused on what we can control: delivering high quality products, investing in a targeted product pipeline, and aggressively managing costs," says Farrell.
The company has seen its share price fall almost 80 percent year over year, and on news of its loss its shares closed 10 cents down to $4.14.