After the bell yesterday, the company said that its first-quarter loss widened slightly to $3.9 million or $0.10 per share as sales fell 10% to $88.2 million. While last year's results were boosted by the smash hit Finding Nemo -- based on the movie from Disney
In its earnings release, THQ also said that COO Eric Doctorow, who just joined the company last October, had resigned "to pursue other opportunities." During the earnings conference call, CEO Brian Farrell basically said that there was a mismatch between Doctorow's skills and the job's requirements. In the interim, Farrell will assume his duties.
Still, it was the guidance that left investors shaken.
For the full year, THQ bumped up guidance and now expects to earn $1.10 per share on $680 million in revenue. However, that figure is significantly back-loaded, as the company forecasted a second-quarter loss of $0.20 per share on $80 million in sales -- far below the analyst estimate of a $0.06-per-share profit and $128.4 million in revenues.
Also, some investors aren't so confident about the holiday quarter, either. Unlike last year, this holiday season will be filled with must-have titles such as Konami's Metal GearSolid,Sony's
That said, it's important to note that THQ's key titles will be three games based on holiday films aimed at a younger audience than the aforementioned games, so I'm not convinced THQ's story isn't intact. In addition, THQ's holiday lineup will also include the next game in its own enduring hit WWE wrestling series.
Part of the reason for the back-end gains is that it pushed back the release date of its new S.T.A.L.K.E.R. title for the PC back into its fiscal fourth quarter, or after the holiday season. The company feels that it will be more successful launching a new brand when things quiet down, rather than throw it in the mix with what must be seen as superior competitors, if only because they have established brands.
THQ, which has been known for its successful targeting of younger gamers, is now making a push towards a clearly more mature audience with games such as Full Spectrum Warrior, Destroy All Humans, and S.T.A.L.K.E.R. And while it's easy to be skeptical about the guidance, that's probably the safe way to play it. However, the new Full Spectrum Warrior title has been launched to rave reviews, so it may also be too soon to write off THQ's back-loaded optimism.
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Fool contributor Jeff Hwang owns shares of Electronic Arts.