Updated from Oct. 28THQ ( THQI) narrowed its loss in its second quarter on a 48% jump in sales, easily topping analysts' estimates. But the company on Thursday offered a somewhat mixed outlook for coming periods. Although its third-quarter guidance was essentially in line with the Street's expectations, its full-year forecast implies worse-than-expected results in the company's fourth quarter. Playing into the company's guidance was THQ's decision to delay the release of two upcoming titles. Investors, though, seemed to focus on the recent past rather than on the murky future. Heading into Friday's close, the company's stock was up $3.31, or nearly 17%, to $23.08. In the quarter ended Sept. 30, the video game-software publisher lost $1.4 million, or 2 cents a share, on $142.7 million in sales. In the same period last year, THQ lost $6.4 million, or 11 cents a share, on sales of $96.3 million. Analysts were expecting the company to lose 6 cents a share on $127 million in sales in the just-completed quarter, according to Thomson First Call. The company
THQ reiterated its previous guidance of 67 cents a share in full-year earnings and upped its revenue target to $770 million for the year from a previous goal of $750 million. Assuming the company's year-to-date results and its third-quarter prediction, that translates into a fourth-quarter profit of 11 cents a share on $149 million in sales. In contrast, analysts had predicted that company would earn 15 cents a share on sales of $154.8 million in the fiscal fourth quarter. Factoring into THQ's outlook was the company's decision to move The Barnyard and Saint's Row out of the fourth quarter and into next year, said company CEO Brian Farrell in an interview with TheStreet.com. The Barnyard is based on a movie from Viacom's ( VIAB) Nickelodeon unit, whose release the studio postponed from January until next fall. Meanwhile, THQ decided to delay the release of Saint's Row, which the company is developing for Microsoft's forthcoming Xbox 360 platform, to afford designers more time to work on the game, said Farrell. The delay will also likely mean a larger audience for the game once it is release, because it will give Microsoft more time to build up the user base for the Xbox 360, which is due out next month. Saint's Row, a title in the cops-and-gangsters genre, has drawn unfavorable comparisons from analysts to Grand Theft Auto, Take-Two Interactive's ( TTWO) megahit. And with some analysts predicting that Take-Two will launch a new version of Grand Theft Auto next fall, there's a possibility that the two games will go head-to-head, a battle that THQ would likely lose.
While acknowledging that the game has a "superficial" resemblance to Take-Two's title, Farrell dismissed the criticism, saying that THQ was building Saint's Row from the ground up as a next-generation game and that the company has strong expectations for it. "We think Saint's Row more than stands on its own," Farrell said. "We think it can compete with any product." At the close of regular trading Thursday, THQ shares were off 26 cents, or about 1%, to $19.77.