THQ Sales Down, Losses Up, But Still Meets Guidance

Red Faction and UFC Undisputed publisher THQ today announced a quarterly drop in sales and widening losses as the company continues to make near-term investments in the hopes of long-term profits. Sales for the second fiscal quarter ended September 30 were $77.1 million, down from $101.3 million for the same quarter a year ago. THQ reported losses of $47.0 million, wider than the loss of $5.6 million incurred for Q2 last year. The publisher said results were in line with company guidance. "We continue to invest in our long-term product pipeline, with the recent eight-year extension of our UFC relationship, and the planned addition of Patrice Desilets to our growing team of talented artists creating new intellectual properties for THQ," said CEO Brian Farrell. "Our goal this fiscal year continues to be to position THQ for significant growth in fiscal 2012 and beyond...," he said. One of THQ's highest-profile franchises is the UFC Undisputed series, with the latest entry shipping 2.7 million units this year. THQ this year extended the partnership with mixed martial arts fighting league UFC through 2018. The company also said that it would hire on former Ubisoft Assassin's Creed creative director Patrice Desilets on lead a new THQ Montreal studio. Farrell added, "Our December quarter will be led by WWE SmackDown vs. Raw 2011 and our new uDraw GameTablet. Key releases for our March quarter include our new core game franchise Homefront as well as WWE All Stars, UFC Personal Trainer and de Blob 2." Beyond that, in fiscal 2012, Farrell is placing his bets on the high-budget releases Red Faction: Armageddon, Warhammer 40,000: Space Marine and the "next installment of our Saints Row franchise." The company will continue to expand with games and content on iOS devices, Facebook, Xbox Live and PlayStation Network, said Farrell. THQ expects to report non-GAAP fiscal 2011 net sales of between $825-$855 million and a non-GAAP loss per share in the range of 10-20 cents for the full year. [UPDATE: Regarding Microsoft's new holiday forecast of Kinect sales of 5 million units -- up from 3 million -- Farrell said in an earnings call that the publisher is "well-positioned" if Microsoft achieves the targets. THQ has three Kinect games in development: Fantastic Pets, The Biggest Loser Ultimate Workout and UFC Trainer.]