THQ 10-K report suggests it can’t afford a flop

Monday, 11 June 2012 23:10 GMT By Debabrata Nath

THQ’s 2012 form 10-K reflects the firm’s present financial crisis, wanring that even one missed sales target could have devastating effects on the rest of the publisher’s pipeline.

The report, filed annually with the Securities and Exchange Commission, includes a detailed list of “risk factors,” and other potential problems which could come in the way of the company’s progress.

The very first item on the list reflects that THQ’s going through a tough phase.

“We have incurred operating losses during the last five fiscal years. We have restructured our business operations in order to adjust our cost structure to better align with our expected future business; however, we may continue to incur losses in the future.”

The report also discusses another serious threat: “We may require additional capital to fund our planned business operations.” In the explanation for this factor, the company notes that “We believe we have adequate resources to execute on our product plan and deliver our multi-year pipeline of games; however, there can be no assurance that we will be able to do so without additional capital.”

Should net sales or costs vary from plan, THQ “may need to defer and/or curtail currently-planned expenditures, cancel projects currently in development, and/or pursue additional funding or additional external sources of liquidity, which may not be available on financially attractive terms, if at all, to meet our cash needs.”

The report also acknowledges the fact that it may not be able to afford the failure to achieve anticipated results for even one of its products in this fiscal year.(THQ only has six new releases lined up for the current fiscal year).

“Due to this dependence on a limited number of franchises, the failure to achieve anticipated results by one or more products based on these franchises may significantly impact our business and financial results.”

Jason Rubin was recently appointed as the new President of the company after Danny Bilson decided to resign from his duties.

Thanks, Joystiq.

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