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THQ's stock falls 40 percent in early trading as analysts pile on
THQ's stock falls 40 percent in early trading as analysts pile on
November 6, 2012 | By Mike Rose

November 6, 2012 | By Mike Rose
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As analysts question whether Darksiders publisher THQ can last until next year, the company's stock is rapidly falling, currently down 40 percent in early trading today.

While the company beat the forecasts of financial analysts yesterday, the good news was tempered with an overwhelming dollop of bad, as earnings guidance was suspended, and a number of its biggest upcoming games were delayed.

Wedbush Securities analyst Michael Pachter decreased his fiscal year 2013 revenue estimate for the company as a result from $409 million to $355 million, noting that "the reticence to provide guidance suggests to us that the remainder of the release slate timing is at risk."

"You cannot save your way to prosperity," he added. "Although THQ has been able to lower its cost structure through layoffs and a streamlined release slate in order to temporarily improve profitability, it is unlikely to return to profitability unless its revenues once again begin to grow."

He also said that delaying multiple releases meant that near-term revenues will continue to decline, and development budgets for upcoming games will be even more greatly impacted in a negative way.

Eric Handler from MKM Partners pulled no punches with his analyst note, simply stating, "THQ's FY14 lineup carries potential (South Park, Saints Row), but the big question is, can it make it to next year?"

He later noted that, while he is raising his earnings per share estimate for the company for next year given that South Park: The Stick of Truth is now scheduled for release in the next fiscal year instead, "THQ's lack of execution this entire console cycle gives us little confidence in this outlook."

Cowen's Doug Creutz wasn't exactly complimentary either, noting that THQ perhaps put a bit too much faith in Darksiders 2.

The game "performed below expectations despite what they cited as 'highly-favorable critical reviews'," he said, before adding, "at an 83 Metacritic, we think that is stretching the definition of highly-favorable a bit."


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Comments


Harlan Sumgui
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DS2, a mediocre game with bog standard play and typical videogame writing (i.e. shit) wasn't going to save THQ.

I have faith in Rubin if the rest of THQ can hold on for a little while longer, he can help get the games they need out the door.

He knows that the only way to make a games company profitable is to give core gamers something to get excited about. Give them a real reason to spend $60 and they will, happily. And I don't mean the fake excitement generated by massive marketing budgets and incestuous media-pr copulations.

Rather, real excitement generated from an exceptional product targeting a specific market segment.

South Park and SR4 cannot be merely mediocre run-of-the-mill games. Delay for quality is the right move. And Jason, don't crunch your employees so hard they get divorced and leave the industry.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Beyond Good and Evil
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Rubin inherited a mess that goes right to the core. If anyone on this forum thinks he can just step in an turn around 6-7 years worth of CONSISTENT mismanagement and lack of forward thinking investment in teams, strategy and tech - I've got new for you - he can't. Period.

Anthony Giallourakis
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You are wrong on this one, PERIOD.

Jonathan Murphy
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Are you out of your mind Anthony? BG&E is correct. Even with Rubin at the helm this company is in a bad situation. People aren't calling their demise out of spite, they are calling it based on their sales figures, you know facts! Opinions don't float sales.

Justin Sawchuk
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Yeah and there is also the saying, polishing a turd. Wont really matter how much time they put into it if its a stinker. Someone like blizzard can put as much time as they want into a game because they only have a few high quality games, but pouring time into everything and anything is not going to work, if they are unable to figure out the good from the bad (especially if they have so many subpar games) then they are just blowing the investors money.

Michael Thornberg
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Greed! ..and no true passion for games. Is anyone really surprised? If you don't care for the cow, eventually the milk will dry out.

Anthony Giallourakis
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Things are about to turn for THQ, Inc., IN A VERY BIG WAY. Do your homework, look at every aspect of the press release and spend some time digging into each comment that was made.

The forest is there, don't let the trees block your view. Read and dig deep.

John Woznack
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Time for another reverse stock split, perhaps?

Robert Swift
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@Giallourakis
Dream on. THQ is still making one mistake after another. For example, look at the ridiculous move to put COH 2 preorders on Steam about 5 months before the actual launch.

It was probably pure desperation to get some badly needed cash. But by doing that so early, they completely wasted the preorder advertisement effect from the Steam sales charts. COH 2 was just a few days in the top 10 and then vanished into oblivion because almost nobody wants to preorder that early.

And THQ actually managed to create bad publicity for COH 2 by adding preorder incentives which sound like 'play to win' and didn't care to explain them.

Also, for COH 1 they created advertisements which made the game look like a first person shooter, lol.

THQ is just a big failure and it's time to die!

Beyond Good and Evil
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Being successful in the current industry requires a) hiring the right people (they can't because THQ's reputation is industry worst), b) retaining those people (THQ notoriously fires or alienates it's best people); c) having a long term strategy (they change their core strategy almost every quarter); d) investing in that long term strategy with no expectation of immediate return (they can't they're broke); and e) not letting ego based children who know NOTHING ABOUT PRODUCTION run the company.

I wish the so called pundits, who from the content of their posts, clearly don't understand what's gone at at THQ woudl do us all a favor and stop jumping on here with half baked messages of false hope - it's BAD for the industry (although I do enjoy laughing out loud about all of it in the mornings).

Beyond Good and Evil
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@Giallourakis - if you mean noticing that Skip Paul from Centerview Partners (http://www.centerviewpartners.com/overview.aspx?xitm=2&yitm=1), who was a key player in the growth of Rubin's company "Naughty Dog" (http://en.wikipedia.org/wiki/Jason_Rubin) is now floating in the background after the THQ executive likely intentionally ran the company into a wall to depress it's value and set it up for a transition - if THAT, is what you're referring to - then...YOU ARE STILL MISSING THE POINT.

It's all so subtle and hard to understand and Machiavellian - yawn. No matter what Rubin or anyone else does - it doesn't change the plain and simple fact that THQ is a deeply broken company. DEEPLY. New management, new leadership, new strategy (etc. ad nauseum) is not going to change the fact that THQ is YEARS behind it's competition in almost every category and they have bled out most of the top talent they had at the studios.

There is no overnight turnaround coming - and I wish people would stop saying there is.

Beyond Good and Evil
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@Giallourkis - here's some more fun - http://seekingalpha.com/article/997281-thq-is-in-technical-defaul
t-on-credit-facility

Everything is about to turn around - I sure feel confident. Oh wait, I don't. At all.

Beyond Good and Evil
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@Giallourkis - http://www.gamasutra.com/view/news/181349/THQs_troubles_mount_as_
it_fails_to_pay_a_lender.php#.UKEwfof7Lpc

http://www.ripten.com/2012/11/10/thq-defaults-on-50-million-line-
of-credit/

Boy you sure are a sage there Anthony. Remind me to look to you for pearls of wisdom about gaming companies in future.

Beyond Good and Evil
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@Giallourkis - http://www.gamersdailynews.com/story-29013-THQ-Inc-NASDAQTHQI-On-
the-Verge-of-Bankruptcy.html

Should we jump in now?

How about now?

Now?


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