Successful New Properties

THQ announced today that the company significantly exceeded quarterly guidance, primarly thanks to the positive reception recieved by both Juiced and Destroy All Humans. The performance was still only enough to generate a net loss of $4 million, however.

THQ today posted its fiscal reports for the three month period ending June 30, 2005. The company reported net sales of $158 million. This was larger than the company's guidance of $135-$140 million, and a nearly 80% increase from the $88.2 million in net profit in the same period the year prior.

Despite the increased sales, Q1 saw a loss of $4.0 million, or $0.10 per share, similar to the loss last year of $3.9 million last year. According to THQ, costs and expenses rose significantly, from $95 million last year to $165 million in 2005, likely due to preparatory efforts for the upcoming next-gen console releases in late 2005 and 2006. THQ retained its fiscal guidance for the rest of the year, and seems particularly pleased at the performance of two new intellectual properties.

THQ was quick to emphasize the success of their two hottest titles from Q1. The new original properties, Juiced and Destroy All Humans!, each shipped over a million units. Sales were reportedly strong for WWE Wrestlemania 21 as well.

With the help of the success of their new IPs, THQ was the number 2 independent publisher in North America during the first half of 2005. They achieved similar success abroad as the number 3 independent publisher in the U.K. and Australia/New Zealand.

"To date, THQ has shipped more than one million units of each of our new original properties Destroy All Humans! and Juiced. The success of these new titles significantly expands THQ's portfolio of predictable, recurring franchises," said Brian Farrell, president and CEO, THQ. "We plan to continue to leverage these brands on current and next-generation consoles."

For the full fiscal year ending March 31, 2006, THQ reaffirmed their original fiscal guidance. They expect nets sales of $750 million and net income of approximately $1.00 per share.

THQ predicts $125 million in sales and a net loss of about $0.10 per share for the second fiscal quarter ending September 30, 2005. Q2 sales should see an immediate boost from the addition of The Incredibles to PS2's "Greatest Hits" and GCN's "Player Choice" collections, guaranteeing increased sales for the multi-million dollar franchise now that it retails at the budget price of $19.99.

Farrell was optimistic about the full year outcome, stating, "Fiscal 2006 is off to a great start with the performance of two new original properties. Our release schedule over the next few quarters will feature such proven brands as WWE SmackDown!, SpongeBob SquarePants, The Incredibles, Full Spectrum Warrior, Tak and Warhammer 40,000: Dawn of War."

THQ is hoping that Juiced and Destroy All Humans! will be the first of many successful independently developed franchises for the company. This includes Company of Heroes, a real-time strategy title under development by Relic Entertainment, which focuses on World War II combat and realistically destructible environments. Two other anticipated PC titles include Titan Quest (an Action/RPG set in ancient Egypt and Greece) from Iron Lore, and Supreme Commander (the first real-time strategy for Chris Taylor since creating Total Annihilation) from Gas Powered Games.

The company is also busy making plans for the upcoming release of the next generation of consoles. At E3 2005, THQ premiered Saint's Row from Volition, and The Outfit from Relic Entertainment, both of which are planned to release for the Xbox 360 sometime within the next year.

THQ has added onto its development capabilities by increasing the number of its internal studios to 11, with roughly 1,000 employees across the board. This includes a new studio in New York, devoted to next-gen game development and no doubt hard at work on an as yet unannounced title.

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