THQ Has Massive Third-Quarter Loss and Plans to Entirely Restructure

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THQTHQ announced its financial results for its fiscal third quarter ended December 31, 2011. THQ announced that it will entirely refocus its business, and even the Chief Executive Officer took a pay cut. Read on for more details...
For its fiscal third quarter ended December 31, 2011, THQ announced a net loss of $55.879 million, compared to a net loss of $14.947 in the same quarter the previous year. This was a foreseeable loss resulting from THQ's business practices rather than a one-time event. Simply put, the cost of licenses, development and marketing far exceeded sales. As a result, THQ will entirely refocus its business.

THQ has taken a variety of actions to turn the business around and create a smaller, more profitable business. THQ has decided to drop its business of making crappy, licensed games. The company has eliminated several development studios, and has cancelled support for and future production of the uDraw GameTablet. THQ expects to save around $160 million annually thanks to these changes, after immediate charges of around $11 million.

THQ plans to focus on existing successful franchises and high-profile properties. THQ emphasized the recent success of Saints Row: The Third and the WWE franchise, as well as focusing on the in-development South Park: The Game. That sounds like THQ plans to throw itself behind a few high-profile, high-cost titles and will live or die depending on the success of their few sequels and new properties.

Things at THQ are so bad that THQ's President and Chief Executive Officer Brian Farrell plans to take a 50% pay cut (for one year). In case you were feeling bad for Farrell, that brings him all the way down to $359,250 from $718,500 for the year. He'll also take a cut if fired, but not if THQ is purchased by another company (a likely outcome). There appears to be no change to Farrell's possible bonus, so if he turns things around (and possibly even if he doesn't), he can still expect a big payday. Even the Board of Directors took a 50% pay cut, but that amount is too small (from the Board's perspective) to be of much concern.

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This page contains a single entry by Editor published on February 2, 2012 6:59 PM.

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