THQ beats third quarter financial guidance

Despite a drop in profits compared to the same period a year ago, THQâs third quarter results have beaten initial guidance and exceeded expectations during a widespread industry sales slump.

THQ posted net sales of USD 357.8 million (EURO 298.4 million) and a net income of USD 47.6 million (EURO 39.7 million) for the quarter ending December 31st. During the same period last year, the company racked up sales of USD 400.3 million (EURO 333.8 million) and earned a net income of USD 62.9 million (EURO 52.4 million).

But despite the year-on-year decline, the results have beaten THQâs initial guidance which projected net sales of USD 320 million. Whilst the figures have clearly been affected by a particularly soft market as the industry undergoes its latest hardware transition, THQâs results are noticeably more positive than some of the other major publishers, which the company largely attributes to sales of its mass-market licensed titles.

During the quarter, THQ shipped more than 2.5 million units of wrestling game WWE SmackDown vs. Raw, and more than one million units each of Bratz Rock Angelz, The Incredibles: Rise of the Underminer and SpongeBob SquarePants: Lights Camera Pants! Strong sales of the original Incredibles game and SpongeBob SquarePants The Movie also contributed significantly to the results.

THQ president and CEO Brian Farrell commented: "Our strategy to target the mass-market consumer this holiday succeeded. In 2005, we gained market share in each of our major markets, especially among the core gamer audience, driving our ranking as the number 3 independent video game publisher worldwide, excluding Japan. We continued to diversify our product portfolio, grow our studio system and expand our global sales network, which are key drivers for THQ's long-term profitable growth."

Looking forward, the company forecasts net sales of approximately USD 135 million (EURO 112.6 million) for the fourth quarter and net sales of USD 790 million (EURO 659 million) for the full fiscal year ended March 31st.

"While we view 2006 as a transition year for the industry, THQ is positioned to grow significantly in our fiscal year ending March 31, 2007," Farrell stated. "During the fiscal year, we plan to release several critically acclaimed new titles targeted to the avid gamer, including Saints Row for Xbox 360, Company of Heroes and Titan Quest for Windows PC, and games based on our industry leading mass-market brands, such as the upcoming Disney/Pixar film Cars."