THQ Stock Plunges as Video Game Maker Restructures
Shares of struggling THQ, a company once known best for its video games based on Pixar, DreamWorks Animation and Nickelodeon properties, were freefalling 25 percent in after-hours trading on Thursday to 57 cents. Three years ago they traded for $25.
The company, which recently said it would stop making console games for kids, reported a net loss Thursday of $56 million in its fiscal third quarter compared to a $15 million loss in the same quarter a year ago. Revenue dipped 3 percent to $305 million.
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The company’s latest disaster is the uDraw line of games, which knocked $33 million from its operating income during the quarter. THQ said Thursday it “has no further commitments or plans to manufacture uDraw hardware.”
The company’s restructuring, some of it laid out Wednesday and Thursday, includes laying off 240 people and the halving of CEO Brian Farrell’s salary for a year, from $718,500 previously down to $359,250.
The company intends on slashing $160 million from its expenses annually, primarily by exiting the formerly lucrative kids’ licensed console games category.
THQ said Thursday it “will focus on its core game franchises and digital initiatives.”
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Successful sellers during the quarter were Saints Row: The Third and WWE ’12. The company also said it is developing South Park: The Game.
Also reporting quarterly earnings Thursday was competitor Take-Two Interactive Software, which said net income fell to $14 million from $41 million a year ago. Revenue dropped 29 percent to $236 million.
Take-Two’s results beat Wall Street’s expectation on the bottom line though not on the top line and shares were climbing 2 percent in after-hours trading.