Analysts: THQ Geared For Strong FY09 Despite 'Painful Steps'

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325w ago - Following yesterday's announcement that THQ has ceased production on its Juiced and Stuntman franchises and closed its Concrete Games studio, analysts from Wedbush Morgan, Lazard, and Stern Agee have all remained upbeat on the publisher's future, despite a sharp fall of the company's stock.

"While this is a painful step," said Wedbush Morgan's Michael Pachter, "we think it positions THQ to grow earnings dramatically in FY:09, unburdened by these balance sheet items."

Though Wedbush has lowered estimates on the company "to reflect significantly higher execution risk, given the company's poor performance in FY:08," Pachter says the company's lineup "is quite strong next year, and the increased write offs of capitalized software and streamlining of projects and should position the company to report operating margins in line with its historical performance next year."

Lazard's Colin Sebastian echoed the sentiments, saying that the publisher "is taking more aggressive steps to pare its product portfolio of lower quality and underperforming franchises, and to focus on proven franchises and titles with better potential, including WWE Smackdown, Pixar (Wall-E), Saints Row, Red Faction, and the new UFC license. While we will continue to review the progress of THQ's F2009 pipeline, at this point we are...
 

Analyst unimpressed by Stuntman's start

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345w ago - After posting a less-than-expected second-quarter net loss of $9.3 million last month, THQ reaffirmed its fiscal year 2008 guidance of $1.12 billion to $1.15 billion in net sales. THQ president and CEO Brian J. Farrell told analysts that forecast hinged largely upon the projected platinum status of five internally developed multiplatform games: Frontlines: Fuel of War, MX vs. ATV Untamed, Juiced 2: Hot Import Nights, the latest Destroy All Humans!, and Stuntman: Ignition.

However, selling a million copies for at least one of those games may not be as done of a deal as THQ hoped. In a company note to investors, Lazard Capital Markets analyst Colin Sebastian said early sales of Stuntman Ignition were "a little slow off the blocks" and "slower than originally anticipated." Sebastian noted that the over-the-top racer was experiencing a weak sell-through at retail and that restocking orders were "unlikely in the near-future."

However, Sebastian remained optimistic on Stuntman's outcome. Provided THQ invests in a more aggressive marketing campaign that includes "a free movie ticket and cable ads targeting a 'mass market' audience," Sebastian believes Stuntman Ignition can reach platinum status by March 2008, the end of THQ's 2008 fiscal quarter.

The analyst also maintained THQ's "Buy" rating on...
 







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