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'S.T.A.L.K.E.R' and 'Supreme Commander' Delayed Until 2007

by Rainier on Feb. 3, 2006 @ 3:04 p.m. PST

Although it exceeded predictions, THQ's sales and income were down compared to last year, in line with most other big publishers. Big sellers were WWE SmackDown vs. Raw, Bratz Rock Angelz, The Incredibles: Rise of the Underminer and SpongeBob SquarePants: Lights Camera PANTS! Unfortunately PC gamers are getting a punch in the stomach as THQ revealed in its subsequent conference call that STALKER and Supreme Commander have been delayed until 2007. Read more for detailed financial mumbo jumbo...

For the three months ended December 31, 2005, THQ reported net sales of $357.8 million and net income of $47.6 million, or $0.72 per diluted share. These results exceeded the company's previous guidance of net sales of $320 million and net income of $0.65 per diluted share. For the same period a year ago, THQ reported net sales of $400.3 million and net income of $62.9 million, or $1.05 per diluted share.

For the nine months ended December 31, 2005, the company reported net sales of $658.5 million and net income of $42.2 million, or $0.65 per diluted share. For the same period a year ago, THQ reported net sales of $584.8 million and net income of $52.7 million, or $0.88 per diluted share.

"Our strategy to target the mass-market consumer this holiday succeeded," said Brian Farrell, THQ president and CEO. "In 2005, we gained market share in each of our major markets, especially among the core gamer audience, driving our ranking as the #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."

Farrell continued, "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. 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.

"We are excited about the long-term growth prospects for THQ. We continue to build our pipeline of titles based on our partnerships with some of the world's leading content providers and our growing portfolio of owned and original properties created by THQ's studio system, which encompasses 12 internal studios and strong relationships with leading third-party developers. We plan to leverage this pipeline to capitalize on the strong market growth expected over the next cycle."

Financial Guidance

THQ reaffirmed previous earnings guidance and increased sales guidance for the full fiscal year ending March 31, 2006, and provided initial guidance for the full fiscal year ending March 31, 2007:

  • For the fourth quarter of fiscal 2006, the company expects net sales of approximately $135 million and net income of about $0.02 per diluted share
  • For the fiscal year ending March 31, 2006, THQ expects net sales of approximately $790 million and net income of approximately $0.67 per diluted share
  • For the fiscal year ending March 31, 2007, the company expects net sales in the range of $900 million to $950 million and higher operating margins resulting in net income in the range of $0.90 to $1.00 per diluted share, excluding the impact of stock option expense, which has not yet been determined

All per share amounts reflect a 3-for-2 stock split effected on September 1, 2005.

Recent Developments

  • In calendar 2005, THQ gained market share in each of its major markets and achieved the #3 independent video game software publisher ranking worldwide, excluding Japan, according to the NPD Group, Inc., Chart Track and GfK data
  • During the December quarter, THQ shipped more than 2.5 million units of WWE(R) SmackDown(R) vs. Raw(R) and more than one million units each of Bratz Rock Angelz(TM), The Incredibles: Rise of the Underminer and SpongeBob SquarePants: Lights Camera PANTS!
  • Fiscal year to date, THQ shipped more than one million units of seven titles, including new original properties Juiced(TM) and Destroy All Humans!(TM)
  • THQ announced plans to bring dynamic in-game advertising to its video game titles through its partnership with Massive Incorporated
  • THQ announced today that Doug Clemmer has been named head of THQ Wireless
  • THQ announced today that its Kaos studio, which includes industry veterans from the R&D team responsible for the multi-million unit franchise Battlefield 2, is working on an original property for next-generation consoles and Windows PC scheduled for calendar 2007
  • THQ announced the rights to publish videogames for console and select handheld gaming systems based on Columbia Pictures' highly anticipated feature film Monster House from award-winning executive producers Robert Zemeckis and Steven Spielberg
  • THQ and Conan Properties International, LLC announced a worldwide, multi-year licensing agreement for THQ to develop interactive games based on the Conan universe. The agreement covers development for all current and next-gen systems as well as Windows PC, wireless and handheld platforms

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