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Report: Analyst Puts THQ Bankruptcy Chances At 50/50
Report: Analyst Puts THQ Bankruptcy Chances At 50/50
March 2, 2009 | By David Jenkins

March 2, 2009 | By David Jenkins
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More: Console/PC



THQ has a 50/50 chance of declaring bankruptcy, according to new comments made by Janco Partners analyst Michael Hickey.

"You have mediocre product and you’re running out of cash," Hickey told the Los Angeles Business Journal. "Not the situation they want to be in right now."

In February, THQ reported $191.8 million in losses and a 30 percent drop in revenues, prompting a 24 percent staff reduction of around 600 positions. In the last ten months, the company’s share price has fallen from $20 to around $2.

"I know that makes for good print and sells newspapers, but those aren’t the kind of things we focus on right now," said THQ CEO Brian Farrell in response to Hickey’s comments.

"When the stock price is depressed, the naysayers can have their day in the sunshine. But we have a plan that we’re very confident will give us cash and return the company to profitability."

In the same report, Farrell refused to comment on whether THQ would bid on the Disney-Pixar movie license when it comes up for renew shortly, saying only: "Disney and THQ have been great partners for many years, but it’s got to work for both sides."

Up to one-fifth of THQ’s revenues come from Disney-Pixar licensed games -- and THQ’s current contract only covers the next two movies, one of which is Up.

However, Farrell said that THQ was looking for backers for a new line of credit, to use as a fallback measure if current plans go awry. Currently, the company has no credit line -– only $26 million borrowed as a form of long term debt to ensure liquidity.


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Comments


Jason Weesner
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At a time when publishers and developers (with an emphasis on the latter) are being heavily impacted by the effects of the economy, do we really need these persistent doom and gloom reports by "analysts"? In case Mr. Hickey hasn't figured it out, there are a lot of us in the development community who don't savor the thought of waking up every morning to this particular form of speculative ambulance chasing. With things truly as bad as they are, some amount of optimism isn't unwarranted especially when employees and their families can suffer the results of consistently negative press.

brandon sheffield
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Jason, I completely agree. I think too much negative press is in some ways hurting these companies by eroding stockholder confidence, sometimes unnecessarily.

Chris Remo
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I would be extremely surprised to learn if Mr. Hickey has actually played enough THQ games to roundly declare, "You have mediocre product." The company has put out a lot of interesting and well-reviewed material recently.



I agree with Jason as well as my colleague Brandon--this kind of sensationalistic grandstanding isn't really doing any good.

Lance Rund
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Lesson one: unless you're getting beaten by a cop, the press is not your friend.



They can be useful, but they are not there to help you. The press is there to sell advertising space in their newspaper/broadcast/website, which requires viewership, and good news does not generate viewership. The press corps counts their successes in how many takedowns they trigger, and if a hundred others lose their jobs because of it, "so what". Integrity seldom matters, truth seldom matters, and ethics never matter. Being king-makers... and king-breakers... is what the press is all about, and "collateral damage" never enters into it. You hear that gleeful cackling in the bankruptcy court foyer? It's someone with a press pass with visions of being the next Bob Woodward dancing in his/her brain.



So when you deal with the press, keep in mind that you are dealing with a serpent. No matter what they tell you, whatever you give, leak, imply, or even omit will be twisted in the most harmful manner possible, and while you're tearfully delivering pink slips they're off sabotaging some other company. After all, tomorrow's a new newspaper, and a fresh takedown is needed.



"I make my living on the evening news, just give me something, something I can use. People love it when you lose, give us dirty laundry!"

CJ Kershner
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50/50 odds? Is that the best prediction Hickey can make? THQ's either going to be okay or it's not. Given the current economic climate, this is hardly a blinding insight.



I guess this sort of opinion-based stunt only works if you're an "analyst", as opposed to an actual journalist. If he worked in any other field, Hickey would be looking for a new job.



"Let's check in with Matt and the Dopler 5000 for this weekend's forecase. Matt?"



"Thanks, Angie. We're either going to have nice weather or bad weather. Back to you."

brandon sheffield
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lesson for you lance: analysts are not journalists. they sell no advertising space, they have no accountability.



if you think press count their successes by how many takedowns they trigger, you're some kind of crazy person. there's no money in a corporate takedown for a journalist. One story out of 10 in a day does not keep a website afloat.

Sande Chen
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A financial analyst is making an educated opinion but is not always correct. It's about predicting the future, after all.



As for stock market buys and sells, yes, people listen to analysts.

Coray Seifert
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Interesting. It seems one of those "mediocre products" is #1 on the NPD list this week.

CJ Kershner
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Dawn of War 2 or Blood on the Sand?

Coray Seifert
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DOW II.



Although I heard Blood on the Sand was off the register, yo.



:)


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