THQ takes Q1 loss in spite of solid sales

THQ's MotoGP 06 and its game adaptation of Pixar's movie Cars helped the company see higher-than-expected sales in the first quarter of its 2007 fiscal year, which ended June 30--but its costs exceed its sales, and its losses were wider than last year's.

The publisher took in $138.8 million in sales, primarily spurred by MotoGP and Cars--an increase over last year's sales of $125 million. However, the company spent $159.8 million in operating costs during the same time. That number, coupled with other expenses, caused THQ to report a $12.1 million loss for the quarter, up from $3.96 million during the same period in 2005.

THQ president and CEO Brian Farrell blamed the losses on a downturn that the entire industry has been experiencing.

"Among a number of strong-performing titles in the June quarter, Cars was especially noteworthy, with US sales outpacing both Finding Nemo and The Incredibles [games] over a comparable period," Farrell said in a statement. "We expect sales of Cars to continue to drive our upcoming quarterly results as we complete the global rollout across Europe and Asia this summer and then bring Cars to the Xbox 360 and Nintendo Wii platforms this holiday season."

"With the rollout of Cars overseas and the launch of our key brands on next-generation hardware, we expect to outperform the market in what is widely viewed as a transition year for the industry," he added.

In a conference call today, Farrell touched on some additional points, including a mention that the Nintendo Wii could make inroads in the area of market share when it hits the marketplace later this year.

"With respect to the Wii, they seem to be poised to take share," Farrell said. "I like the uniqueness of it. I like the price point of the Wii. I think retailers it are excited about both of those [points] as well."

He said such momentum gives the Wii "a good chance to compete as the second system of choice in the home."

THQ's stock price dipped slightly today, from Wednesday's $22.55 to $22.12, down 1.91 percent by the market's close. In after-hours trading, however, its stock rose 2.17 percent--above yesterday's closing value--to $22.60 as of press time.