THQ Guides Profit Lower

Soft sales and an outsourcing agreement take their toll.
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THQ's

(THQI)

bottom line for the current quarter will be worse than expected, the company announced on Thursday -- much worse.

The video game-software maker now expects to post a 13-cent-a-share loss for its fiscal fourth quarter when it reports next month. Previously, the company

had predicted 2 cents a share in earnings. The warning marked the second time the company has sought to rein in expectations for the quarter, which ended on March 31.

In a statement, the company blamed soft sales and a new outsourcing agreement for the development of one of its key franchises. Meanwhile, the company reiterated its guidance for the coming 2007 fiscal year.

"Our outlook for fiscal 2007 and the long term remains positive," company CEO Brian Farrell said in the statement.

Investors seemed to shrug off the news. In recent after-hours trading following the warning,THQ's stock was down 4 cents, or less than 1%, to $27.20.

The disappointing bottom line comes despite better-than-expected sales. THQ is now expecting to post revenue for the quarter of about $150 million; its prior guidance called for sales of about $135 million.

The company expects to record about 6 cents more a share in expenses related to price protection and the development of a recently released game,

Full Spectrum Warrior: Ten Hammers

. Companies typically take price-protection charges when retailers respond to soft sales by cutting prices on the games.

Additionally, the company expects to take a charge of 8 cents a share related to an outsourcing agreement with

Yuke's

, which has helped develop wrestling games bearing the

World Wrestling Entertainment's

(WWE) - Get Report

WWE brand for THQ in the past. As part of the agreement, THQ will cease its own development efforts on wrestling games, which the company factored into the charge.

Sales of WWE games accounted for 14% of THQ's sales in fiscal 2005 and remain an important component of the company's overall business.

THQ gave its previous earnings guidance for the fourth quarter in February. At the time, analysts were expecting the company to earn 11 cents a share in the period.