THQ Inc. (THQI) is scheduled to release its third quarter earnings on Thursday, February 2. The company is expected to post revenue of $420 million and earnings of $0.78 per share, compared with consensus estimates of $417 million and EPS of $0.64.
Due to weak sales of the uDraw GameTablet on Xbox 360 and PS3, THQ lowered its 3Q revenue guidance by 25 percent to an implied $382.5 million to $412.5 million in December.
The company de- emphasized kids' games last year, incurring a $30 million charge in 3Q11. THQ announced on January 25 that it has shipped 3.8 million units of Saints Row: The Third. THQ's U.S. retail sales picked up 17 percent in the third quarter according to NPD.
Second Quarter Results & Earnings History
THQ Inc reported second quarter results which beat Street expectations. Adjusted for digital revenue, THQ's sales grew 70 percent to $119.6 million, beating the $100.4 million that analysts were expecting.
The company reported a net loss of $46.6 million, or 69 cents per share in the second quarter ended Sept 30, coming in above analysts' consensus estimate of a loss of 83 cents per share.
Chief Executive Brian Farrell said in a statement that the third quarter will be "the largest quarter in our history, in terms of sales and earnings."
THQI reported a loss of $0.56 per share in 1Q2012 and profit of $0.15 per share in 4Q2011 on revenue of $195.2 and $124.2 million respectively.
Our Take
Wedbush Securities maintains a Neutral rating and 12-month price target of $1.50 which reflects an enterprise value of $150 million, and incorporates the company's key franchises, brand equity, and going concern status.
The improvement in the quality of upcoming games is key for the company to show earnings improvement, but execution remains uneven. Recent cost control measures which have been implemented are intended to preserve cash, but THQ could experience a cash squeeze by summer.
