THQ posted its financial report last night, suggesting that all was not well at the Californian publisher. Aside from stating losses of $21 million, the company also announced delays of Company of Heroes 2, Metro: Last Light and South Park. The move has made investors nervous.
Reuters reports that THQ’s stock has plummeted due to the ‘let down’ of Darksiders 2, reports of proposed lay-offs and the hiring of financial firm Centreview Partners in an attempt to dig the company back from the brink.
The site states that today’s share drop of 46% marks THQ’s biggest single-day loss in years, and comes as the publisher has ceased to accept any further questions on its current financial situation.
Part of the issue – the site explains – comes from the failure of Vigil Game’s sequel Darksiders 2 to turn a profit. It has sold 1.4 million units since launch, but needed at least 2 million to break even. The shortcomings, along with a wealth of other issues has resulted in THQ’s stock falling to $1.59 per share at the time of writing.
Meanwhile, Wedbush Morgan analyst Michael Pachter has predicted that THQ will see sale or bankruptcy as a result of its loss, stating “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. 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 do you make of THQ’s financial situation? Can it be saved? Let us know what you think below.