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Analyst Cautious On THQ As Red Faction: Guerilla Preorders Lag

Although THQ's new UFC title could sell over 1 million units, lower-than-expected presales for THQ's Red Faction: Guerilla are making analysts wary about the publisher's future prospects.
10 days before its release, lower-than-expected presales for THQ's Red Faction: Guerilla are making analysts wary. "We have some concerns about the prospects for Red Faction: Guerrilla, which at just 10 days from release is not performing particularly well on online retail best seller charts," says Cowen Group analyst Doug Creutz. The title doesn't appear on Gamestop.com's top eight sellers for either PlayStation 3 or Xbox 360, Creutz notes, and it only entered Amazon's top 100 for the first time this week -- while other upcoming releases like Sony's Infamous, Activision's Prototype and Electronic Arts' Fight Night Round 4 have been on the charts for several weeks. "While we think the game's ultimate performance will be influenced by critical reviews, we are somewhat concerned by the apparent scarcity of preorders," says Creutz, who predicts the game will sell 670,000 in its first year. But over the past year, possibly because of the macroeconomic environment, preorder levels have shown to be less of a predictor of sales performance than they may have been in the past. The strongest example is EA's Madden NFL 09 -- analysts expressed concern about the franchise's longevity when preorders flagged, but the title ultimately performed 6 percent better than the prior year's iteration, a result EA Sports boss Peter Moore called "vindication." Creutz says that UFC 2009: Undisputed, which released May 19, is likely to be a "solid hit" for THQ, on the other hand -- it's currently the number one seller for the Xbox 360 and the number two seller for the PlayStation 3 on Amazon and GameStop. "Our initial read on the title gives us confidence that it is on track to meet and possibly exceed our 1MM first-year US unit estimate, though we don't expect a blowout of our estimate (which we would quantify as more than 1.5MM first-year US units)," says Creutz. But possible poor performance for Red Faction: Guerilla could weigh down UFC's upside -- and THQ's next big new IP title, Darksiders, has no official release date, and little is known about it. "We think prospects of success for the new IP title are uncertain," says Creutz, cautious on the company's shares with so much still to be revealed. The Saints Row publisher saw a $431 million net loss in what it called a "disappointing" fiscal 2009, with sales totaling $830 million -- down 23 percent from $1.04 billion the previous year. THQ's fiscal 2010 began March 31.

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