THQ has been in transition for quite some timeAfter struggling through much of 2008, the publisher took drastic action to realign its costs in November, announcing the closure of five internal studios and substantial layoffs and unveiling its new shift in focus from quantity to quality
The pains of that transition were brought into the spotlight yesterday, when THQ reported a dismal October-November quarter marked by a $192 million loss and expanded restructuring that extended its headcount reduction to 24 percent of its staff, or 600 employeesThe effect of yesterday's earnings announcement was immediateTHQ's stock price suffered a precipitous drop today, falling 17.87 percent by market close to $3.40 per share, having recovered from a day low of $2.45
What this means for THQ going forward is a matter of dispute among industry analystsThrough the eyes of Signal Hill Capital Group's Todd Greenwald, THQ isn't likely to make up any ground during its next fiscal year thanks to what he believes to be a weak upcoming lineup
"The loss of Saints Row 2 (2.6m units) will be hard to compensate for--we don't think Red Faction or Darksiders will come anywhere close," said Greenwald"Furthermore, WWE appears to be a franchise in decline, especially as the PS2 platform dies off, and Pixar's Up should underperform WALL-E (which underperformed Ratatouille, which underperformed Cars...)While UFC will help, it is licensed, externally developed, and will have to be heavily marketed for it to succeed, so profitability may be limited."
Greenwald also sees a flaw in THQ's efforts to better align itself under Nintendo's best-selling console and portable"Furthermore, THQ's large lineup of kids/family-fare/mass-market titles will be hard-pressed to stand out in a crowded Wii/DS market, and are very susceptible to price cuts," he said
UBS Securities analyst Ben Schachter also believes that THQ's restructuring efforts will mean nothing unless the company can create more attractive games"While the steps to right-size the business for a lower revenue base continue to move the company in the right direction, none of it will matter unless the company can get things right with its games," said Schachter"This has been THQ's primary problem for the last two years." Welcome to our Cheap WOW Gold Store. All of us appreciate your business, and as a long-term WOW Gold retailer on the market, we really love giving you the best deal and the best service. We are sure that you can really get the World of Warcraft Goldon your order.