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THQ could face sale or bankruptcy following poor financials, predicts Pachter

Tuesday, 6th November 2012 09:55 GMT By Dave Cook

THQ published its most recent financial report last night, and the results made for grim reading. The publisher has now hired an accountancy firm to seek “strategic and financing alternatives”, but Wedbush analyst Michael Pachter isn’t convinced the move will be enough to avoid sale or bankruptcy.

VG247 reported on THQ’s financial report, along with the news that release dates for South Park, Metro: Last Light and Company of Heroes 2 had all been pushed back. South Park is the biggest hit, now pushed back to ‘fiscal year 2014′.

On the matter, THQ president Jason Rubin stated, “I firmly believe releasing our fourth quarter titles without extra time for polish in the current environment would lead to underperformance that could in turn lead to future additional capital shortfalls.”

“But extending development schedules in order to make the best possible titles also has financial implications,” he added, “Yet there can be no doubt which path has the greatest chance of leading to the long-term success of the company. We must follow the course that generates the highest quality games, and will establish THQ as a mark of quality for the consumer.”

Now, GI.biz reports that THQ has now hired Centreview Partners to seek a solution to the poor financial state of the company, equating to losses of $21 million.

On Centreview’s hiring, a THQ statement explained that the accountants would “assist the company in evaluating strategic and financing alternatives intended to improve THQ’s overall liquidity, including raising additional capital, preserve the company’s ability to bring the best possible games to market during the most advantageous release windows and to help address the $100 million 5% convertible senior notes due August 2014.”

Wedbush Morgan analyst Michael Pachter has now thrown his hat in the ring, stating in a ote to investors, “Should its financial position continue to deteriorate, we expect THQ to raise financing through an equity sale that could lead to dilution of existing shareholders We expect creditors to be asked to renegotiate terms at a discount; if they are unwilling, bankruptcy is possible.”

Pachter added, “Although THQ has been able to lower its cost structure through layoffs and a streamlined release slate in order to temporarily improve profitability, it is unlikely to return to profitability unless its revenues once again begin to grow.”

What’s your take on THQ’s situation? Was its slate of software up to scratch or could more have been done to help avoid losses? Let us know below.

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15 Comments

  1. roadkill

    Well what can they do!? Warhammers and Darksiders are pretty damn awesome but if people will keep throwing money at Activision THQ will fall. It’s clear that there are not enough mature gamers out there..

    #1 2 years ago
  2. Greek God

    I still need to buy Darksiders 2.. -.-

    #2 2 years ago
  3. The_Red

    I think more than DarkSiders 2′s performance, it is the delay of South Park and Metro that is gonna hurt and probably ruin them. South Park is a game that could actually attract many SP fans because it was made partially by creators of the show and looks / feels just like an episode of Comedy Central series.

    #3 2 years ago
  4. Timurse

    Actually almost all the latest games by THQ are very good. Darksiders 2? Solid improvement on the first game, really cool and plays great. Saint’s Row 3? Really cool. Not GTA cool, but Saint’s Row cool. Metro 2033 was also atmospheric and good. Even WH: Space Marine demo was interesting. What’s up with them? Bad marketing?

    #4 2 years ago
  5. SplatteredHouse

    The two things that most strike me about this story, is how we’ve not seen sight nor sound of Saint’s Row whatever-its-name-something-sequel (really?)-Dominatrix …and that’s supposed to be out before Stick of Truth, of which we’ve also seen zippo, even though we’re in the part of the year where, if something’s coming in early 2013, they’re showing it now.

    is this kind of thing: http://www.polygon.com/2012/11/1/3560318/homefront-kaos-studios-thq all that isolated?

    #5 2 years ago
  6. alimokrane

    I hate the world we live in when COD sells 20million+ and Darksiders (a far BETTER game) struggles to shift 500k…. what a shame, what a bloody shame!

    #6 2 years ago
  7. GrimRita

    Get lost Pratcher! THQ will rise from the ashes. After all this is the same man that has so many missed predictions.

    #7 2 years ago
  8. SplatteredHouse

    @7: They’re circling the drain. I don’t think parallels to Midway are that wide of the mark.

    #8 2 years ago
  9. Telepathic.Geometry

    Man, if THQ go out of business, it’ll just be yet another nail in the coffin of modern videogaming, a world where it’s AAA or indie or fuck off. :-/

    #9 2 years ago
  10. SplatteredHouse

    you’re correct, TG. The analysts predicted a widening gulf between AAA and indie, with scarce room to stand in-between. THQ is one of the few remaining publishers of its ilk.

    #10 2 years ago
  11. SameeR_Fisher

    It’s a shame, THQ got some very solid IPs like Metro, Darksiders, the new game from Assassin’s Creed Creator ((Patrick)), I would hate if those games go to waste.

    #11 2 years ago
  12. Christopher Jack

    They’ve created many of my favourite games to date, they were far better when they were before they tried to appeal to the common denominator & kind of failed. They frankly wouldn’t be worth a buy out by any major third party publisher either. Let’s hope they can get their together sometime soon.

    #12 2 years ago
  13. Sini

    im glad they are delaying metro rather than throwing it out there asap

    #13 2 years ago
  14. SplatteredHouse

    Their stock’s lost nearly 50% of its trading value. http://gamasutra.com/view/news/180976/THQs_stock_falls_40_percent_in_early_trading_as_analysts_pile_on.php#.UJlFOIamjtV (40, at time of article. Currently 47)

    #14 2 years ago
  15. TD_Monstrous69

    It’s just sad to see where THQ went, though good where they were trying to go. I grew up with THQ’s games, and looking back, thought they were nothing more than crappy licensed games. I was intrigued when I had heard the company was shifting focus away from licensed games to more core titles, and for most parts, it looked like they were on the right track with franchises like DarkSiders, Company of Heroes, and Saints Row, and investing in new IP like Homefront, Itagaki’s Devil’s Third, and a trilogy with Guillermo del Toro’s inSANE told me they were genuine with this effort. Even though the quality for each of those titles differ, and unfortunately, they ended up cancelling, and returning the rights of each prospective game to their creators (namingly, del Torro with inSANE, and Devil’s Third with Itagaki, more than sure those games will find homes somewhere), it was at least good to know they understood who they were trying to get at when making games like this. But, it’s unfortunate to see that it doesn’t seem like they knew how to get at that specific type of audience while still being a financially viable publisher. Hope that someone buys them up, and rights the ship there (not that Jason Rubin isn’t trying), if not, well, it was a nice try THQ.

    #15 2 years ago

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