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THQ has announced several cost cutting measures and cancellations of game titles in its 2008 fiscal outlook press release. The game publisher announced they will no longer be publishing games based on the Juiced and Stuntman racing series. Stuntman: Ignition was noted as one of the underperforming titles. In addition to Stuntman: Ignition, two other THQ titles didn't sell well for THQ, Conan and Ratatouille.
For upcoming titles, THQ has decided to cancel the release of Frontlines: Fuel of War for the Playstation 3, making it exclusive for the Xbox 360 platform. Destroy All Humans!: Big Willy Unleashed has also been cancelled for the PS2, but is still scheduled for release on the Wii.
THQ has also closed its Concrete Games studio, which was working on an unannounced game, with employees offered jobs within one of its other studios.
From THQ
Press release:
THQ Updates Fiscal 2008 Outlook
AGOURA HILLS, Calif.--(BUSINESS WIRE)--Jan. 23, 2008--THQ Inc. (NASDAQ: THQI) today announced updated guidance for its fiscal third quarter ended December 31, 2007, and its fiscal fourth quarter and year ending March 31, 2008.
For the fiscal third quarter ended December 31, 2007, the company increased revenue guidance to approximately $509 million from $490 million, reflecting better-than-expected sales of WWE(R) SmackDown(R) vs. Raw(R) 2008 and MX vs. ATV(TM) Untamed. However, the company expects to report approximately $20 million in accelerated amortization expense related to the underperformance of certain previously-released games, including Stuntman(R):Ignition(TM), Ratatouille and Conan(R). In addition, consistent with the company's previously-announced quality initiatives relating to product development and its product pipeline, the company expects to record non-cash charges of approximately $27 million related to:
1) the cancellation of the PlayStation(R) 3 (PS3) version of Frontlines(TM): Fuel of War(TM) and the PlayStation(R) 2 (PS2) version of Destroy All Humans!(R): Big Willy Unleashed;
2) costs associated with two unannounced titles for Xbox 360 and PS3 that had been scheduled for release in fiscal 2010; and
3) the company's decision not to pursue its Juiced(TM) and Stuntman(R) intellectual properties.
The company also announced the closure of its Concrete Games studio, which was working on one of the unannounced titles. THQ expects a substantial number of the studio's employees to be offered positions in its other studios. The closure will be reflected in the company's fiscal fourth quarter results.
"In October, we announced certain product quality initiatives, including personnel and structural changes in product development and a more rigorous internal and external product evaluation and feedback process," said Brian Farrell, president and CEO of THQ. "Consistent with these initiatives, we have taken actions to strengthen our pipeline and position ourselves to compete aggressively with compelling, high quality games."
As a result of these non-cash charges, the company now expects to report GAAP net income of approximately $0.22 per diluted share for the December quarter. On a non-GAAP basis, excluding stock-based compensation expense of approximately $0.01 per diluted share, the company expects to report net income of approximately $0.23 per diluted share for the quarter. Both GAAP and non-GAAP net income includes a $0.02 per diluted share gain from receipt of additional proceeds related to the sale of Minick AG in fiscal year 2007.
For the fiscal fourth quarter ending March 31, 2008, the company expects to report net sales of approximately $200 million, compared with its previous guidance of $240 million. Due to the significant online play component of Frontlines: Fuel of War on Windows PC, the revised expectations now include the deferral of approximately $10 million of revenue from that title. The revised sales expectations also reflect the cancellation of the PS2 version of Destroy All Humans: Big Willy Unleashed, which was previously scheduled to ship in March, and lowered expectations for several titles which launched earlier in the fiscal year. The company now expects to report a GAAP net loss of approximately $0.13 per share for the fiscal fourth quarter. On a non-GAAP basis, excluding stock-based compensation expense of approximately $0.07 per share, the company expects to report a net loss of approximately $0.06 per share.
As a result, for the fiscal year ending March 31, 2008, THQ expects to report net sales of approximately $1.04 billion and a GAAP loss per share of approximately $0.16, which includes approximately $0.21 per share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, the company expects to report net income of approximately $0.05 per diluted share.
The company plans to report its fiscal third quarter financial results and outlook in more detail and to host a conference call on Tuesday, February 5, 2008, after market close.
Non-GAAP Financial Measures
This press release discloses forward-looking information that includes expectations that are not presented in accordance with United States generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures exclude stock-based compensation expense and related income tax effects from THQ's expected results for future periods. The non-GAAP financial measures included in the earnings release have been reconciled to the comparable GAAP financial measures and should be considered in addition to measures presented in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP financial measures.
When evaluating the performance of its business, THQ does not consider stock-based compensation charges. Likewise, THQ excludes stock-based compensation expense from its short and long-term operating plans. In contrast, THQ's management team is held accountable for cash-based compensation and such amounts are included in the company's operating plans. In addition, the stock-based compensation charges are subject to significant fluctuation outside the control of management due to the variables used to estimate the fair value of a share-based payment, such as, THQ's stock price, interest rates and the volatility of THQ's stock price. Further, when considering the impact of equity award grants, THQ places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Powered by AkoComment 2.0! |
