THQ Inc. Earnings: Loss Widens, Falls Below Estimates

THQ Inc. (NASDAQ:THQI) reported its results for the third quarter. THQ is a worldwide developer and publisher of interactive entertainment software for all popular game systems.

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THQ Earnings Cheat Sheet for the Third Quarter

Results: Loss widened to $55.9 million (82 cents per diluted share) from $14.9 million (loss of 22 cents per share) in the same quarter a year earlier.

Revenue: Fell 2.9% to $305.4 million from the year earlier quarter.

Actual vs. Wall St. Expectations: THQ Inc. reported adjusted net income of 35 cents per share. By that measure, the company fell short of mean estimate of 76 cents per share. It fell short of the average revenue estimate of $417.6 million.

Quoting Management: “Saints Row: The Third and WWE ’12 demonstrate the strengths of THQ’s core gaming capabilities. These titles performed at or better than the expectations we shared during our last investor conference call, driven by favorable critical reviews, community engagement and outstanding marketing efforts,” said Brian Farrell, THQ President and Chief Executive Officer. “Sales of the uDraw GameTablet and related software, and other titles in the kids, family and casual category were far weaker than anticipated, substantially reducing our financial results for the quarter.”

Key Stats:

Gross margins fell 3.9 percentage points to 15.8%. The contraction appeared to be driven by falling revenue, as the figure fell 2.9% from the year earlier while costs rose 1.8%.

A year-over-year revenue decrease last quarter snaps a streak of two consecutive quarters of revenue increases. Revenue rose 89.5% in the second quarter and 30.6% in the first quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with a loss of -71 cents versus a mean estimate of a loss of 86 cents per share.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 6 cents per share, a drop from 9 cents. Down from a loss of 18 cents per share sixty days ago, the average estimate for the fiscal year is now a loss of 85 cents.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com