THQ Swings to Profit, Raises Outlook

Shares of the video-game software maker jump in after-hours trading.
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Supercharged sales helped video-game software maker

THQ

(THQI)

turn a year-ago loss into a profit in its fiscal fourth quarter.

THQ shares surged following the report. In after-hours trading, the company's stock was recently up $1.54 a share, or 8.4%, to $19.92. THQ shares finished Wednesday's regular trading off 6 cents, or 0.3%, to $18.38.

The company earned $5.43 million, or 14 cents a share in its quarter ended March 31, compared with a loss of $7.69 million, or 20 cents a share, in the year-earlier period. THQ's sales jumped 84.3% to $123.14 million.

Those results topped Wall Street's expectations. Analysts polled by Thomson First call were expecting THQ to earn 12 cents a share on $108.85 million in sales. Last month, the company

raised its guidance to 12 cents a share on sales of $110 million.

The company projected more modest results in its current fiscal year, but still offered better-than-expected overall guidance. THQ expects to earn $1.05 to $1.10 a share in fiscal 2005 on sales of $680 million. That forecast represents earnings per share growth of 14% to 20% on a sales gain of about 6% over its fiscal 2004 results.

That may be an unremarkable outlook, but the company had previously been even more conservative in its forecasts, and analysts were expecting much worse. Wall Street had predicted the company would earn 97 cents a share in fiscal 2005 on $665.10 in sales, according to Thomson First Call. Meanwhile, THQ's prior guidance was for earnings of 94 cents a share on sales of $655 million.

But the company doesn't expect to start besting earnings projections in its first quarter. THQ projected it would lose 10 cents a share in the June quarter on sales of just $85 million. Analysts were looking for a profit of 5 cents a share on $96.73 million in sales.