Updated from 4:47 p.m. EDT

Profit at

THQ

(THQI)

rose 86% in its fourth quarter, topping the Street's expectations. But the company warned that first-quarter results will come in far below analysts' estimates, echoing a similar report from industry leader

Electronic Arts

(ERTS)

.

On a conference call, company executives emphasized the positive. The company's revenue growth in the quarter -- about 40% -- was double that of the overall industry, noted CEO Brian Farrell. And THQ is making key investments that should benefit it in the next hardware cycle.

The video-game market is likely to grow with the introduction of new consoles later this year, Farrell said. "We intend to capture a significant part of the market's growth," he said.

Despite his bullish comments, investors seemed to focus more on the company's disappointing near-term outlook. In after-hours trading, the company's shares were off 40 cents, or 1.5%, to $25.68.

In its quarter ended March 31, THQ earned $10.1 million, or 24 cents a share. That result topped the company's fourth quarter a year earlier, when it earned $5.43 million, or 14 cents a share.

Sales jumped to $171.9 million from $123.1 million a year earlier.

Both earnings and revenue in the latest quarter were above forecasts. On average, the analysts polled by Thomson First Call were looking for 21 cents a share in earnings on $167.3 million in sales. The company

predicted in February that it would earn 21 cents a share on revenue of $165 million.

But so much for the good news: THQ projected it would lose 15 cents a share in its current quarter, thanks to increased costs. The company projected that sales would range from $135 million to $140 million. On the call, CFO Edward Zinser predicted that the company's bottom line would be "substantially better" in its second quarter.

However, Zinser warned that sales from the third quarter, which covers the holiday period, likely will fall shy of last year's results. THQ's game based on the popular

The Incredibles

movie brought in a windfall of sales in its holiday quarter this past year.

For the full year, the company reiterated previous guidance of $1 a share in earnings on $750 million in sales.

Wall Street had forecast the company would lose 3 cents a share on $133.7 million in sales in its current quarter. For the full fiscal year, analysts were predicting earnings of $1.02 on $753.2 million in sales.

In the first quarter last year, the company lost $3.9 million, or 10 cents a share, on $88.19 million in sales. In the full year, THQ earned $62.79 million, or $1.56 a share, on sales of $756.73 million.

THQ is predicting that sales of console games for current generation hardware will decline this year, said Zinser. But the company expects sales of software for Nintendo's DS and for Sony's PlayStation Portable will make up for much of that shortfall, he said.

Meanwhile, the company expects to ratchet up software and product development costs this year as it gears up for the next generation of consoles, Zinser said. Product development costs, for instance, are expected to jump to about 11% of sales this year from about 10% of sales in the just-completed year, he said.

THQ's disappointing near-term guidance follows that of Electronic Arts on Tuesday. EA

projected that its fiscal first- and second-quarter earnings would fall far short of last year's levels and would come in below the Street's estimates.

Shares of THQ closed regular trading off 19 cents, or less than 1%, to $26.08.