THQ Q2 profit beats estimates; raises outlook
EmptyVideo game publisher THQ Inc. on Friday posted a better-than-expected quarterly profit, boosted by sales of its new urban action title "Saints Row," and raised its full-year outlook.
Net income was $12.6 million, or 19 cents per share, for the fiscal second quarter ended Sept. 30, compared with a year-earlier net loss of $1.4 million, or 2 cents per share.
Excluding equity-based compensation expenses, THQ said profit was 25 cents per share, easily beating the average Wall Street target of 3 cents, according to Reuters Estimates.
THQ chief executive Brian Farrell told Reuters the holiday season "feels pretty good so far," but added the company is taking a careful approach, given the still unfinished move to new console technology.
"We've all been through these transition years before. Let's just be cautious," said Farrell, who added that he was waiting to see if the momentum for games like "Saints Row" continues.
Game makers have grappled this year with a revenue-dampening move to new game consoles and have only recently begun to see sentiment turn.
Microsoft Corp. released its Xbox 360 about a year ago, while market leader Sony Corp. and Nintendo Co. Ltd. are readying debuts of their PlayStation 3 and Wii consoles later this month.
Agoura Hills, California-based THQ said the preliminary results and outlook do not take into account any adjustments that will likely result from its previously announced review of past stock options grants.
The quarterly results came a day after Electronic Arts Inc., the world's largest video game publisher, posted a
surprise quarterly net profit and said it now expects to be in the black for the full year. Electronic Arts stock jumped 12% on Friday.
Last week, Activision Inc. preannounced revenues
that blew past internal targets. That news came after market researcher NPD had reported several months of rising U.S. game sales.
THQ said second-quarter net sales rose 68% to $240.2 million on the popularity of two new titles -- "Saints Row" and "Company of Heroes" -- and continued sales of games based on the Disney-Pixar animated film "Cars".
The result beat the average analyst expectation of $201.2 million, according to Reuters Estimates.
THQ raised its net sales forecast for the 2007 fiscal year to a range of $925 million to $975 million, and sees net income per share at 95 cents to $1.05, excluding equity-based compensation expense of 18 cents per share.
Analysts, on average, expected revenue of $944.8 million, and earnings per share of 95 cents, according to Reuters Estimates.
In July, THQ forecast sales at $900 million to $950 million, and earnings per share at 90 cents to $1.
During a conference call, analysts questioned whether the full-year forecast was too conservative, given its performance in the second quarter.
The stock was up 25 cents to $30.35 on Nasdaq after touching a session high of $32.30.