THQ Soars After Raising Fourth-Quarter Sales Estimates
THQ Inc. (THQI) soared the most in more than two decades after saying it expects to report a smaller fourth-quarter loss than anticipated, helped by rising sales of the “Saints Row: The Third” video game.
The Agoura Hills, California-based company gained 33 percent to 60 cents at 1:40 p.m. in New York, after earlier surging as much as 46 percent for the biggest intraday increase since at least 1991. The shares, which peaked at $36.39 in April 2007, had slumped 90 percent in the past year before today.
THQ is working to save cash by cutting 240 jobs, reducing executives’ pay and focusing development efforts on new properties and social games, Michael Pachter, an analyst with Wedbush Securities in Los Angeles, said today in an interview.
“The good news is they know they face a potential cash crisis, and they’re acting prudently to address it,” said Pachter, who has a neutral rating on the shares. “Before they cut prices, they probably were going to run out of money by Christmas.”
The company expects a net loss, excluding some items, in the range of 10 cents to 20 cents a share in the period ended March 31, compared with a previous forecast for a loss of 35 cents to 50 cents, according to a statement today.
Net sales were $160 million to $170 million, compared with a prior range of $130 million to $150 million, THQ said.
The company faces a liquidity crisis after its uDraw game tablet failed to catch on with consumers and it waited too long to address a growing market for casual games, said Pachter.
“Saints Row” sales rose after THQ in late December reduced the price of the game to attract buyers, Pachter said.
The company is scheduled to report fourth-quarter results on May 15.
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