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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
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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