THQ Reports Substantial $115.3 Million Loss in Q2 2008, Cuts 17% of Staff

THQ announced today the results for the second fiscal quarter ending September 30, 2008. The company's Q2 results showed net sales of $164.8 million, down nearly a third compared to the $229.3 million in the previous year. Over the same period, THQ also posted a loss of $115.3 million, or $1.73 per share, a substantial increase from the loss of $2.2 million, or $0.03 per share, during Q2 2007. Disappointing returns are attributed to lower than expected sales of WALL-E.

For the fiscal year ending March 31, 2009, THQ is now expecting sales to be in the range of $875 - $900 million. The company expects that earnings will break even for the second half of fiscal 2008. The publisher mentioned that it has delayed Volition's Red Faction: Guerrilla and Vigil's Darksiders: Wrath of War until its next fiscal year (ending March 31, 2010).

THQ also recently closed five studios. The company today classified this as part of a "significant business realignment to position THQ for future profitability and growth." THQ said this now includes layoffs for about 250 people, or 17 percent of its total studio staff.

"We have made substantial progress in improving product quality and innovation, as evidenced by recent shipments of several well-reviewed games including de Blob and Saints Row 2," said Brian Farrell, THQ president and CEO. "We are aligning our business to be more competitive in key consumer segments and address the current business environment. We expect the combination of a much more focused and competitive product line with a more efficient cost structure to put THQ back on the path to growth and profitability in fiscal year 2010."

In related THQ news, the company also announced today that Executive VP and CFO Colin Slade will take a leave of absence for health reasons with Chief Accounting Officer and Corporate Controller Rasmus van der Colff taking over as interim CFO, effective November 6, 2008. "Colin has made a strong contribution to THQ since he joined and we look forward to his return as soon as possible," added Farrell. "In the meantime, I am confident that THQ's experienced finance organization will continue to meet the financial, accounting and reporting needs of the company."