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THQ Posts First Quarter 2006 Results

Publisher and developer THQ has released its results for the first quarter of fiscal year 2006, a period ending June 30th, 2005, and has shown a better-than-expected loss...
Publisher and developer THQ has released its results for the first quarter of fiscal year 2006, a period ending June 30th, 2005, and has shown a better-than-expected loss, though has disappointed analysts marginally by forecasting slightly lower results than analyst estimates for the current quarter. Regarding THQ's Q1 2006 performance, net sales increased to $158.0 million, a 79% increase over its 2004 first-quarter take of $88.2 million, but the company still posted a net loss of $4 million, which amounted to $0.10 per stock share and was slightly increased from the previous year. However, on the positive side, results were significantly better than the company estimates of sales of $135-$140 million and a loss of $0.15 per share. The better-than-expected financial performance for the quarter was due to high sales of new IP Destroy All Humans! and Juiced, both of which sold over a million copies across all platforms, as well as the traditionally strong performance of the new Wrestlemania title. "The success of these new titles significantly expands THQ's portfolio of predictable, recurring franchises," said THQ CEO Brian Farrell. "We plan to continue to leverage these brands on current and next-generation consoles." In the coming quarters, THQ is also preparing games in existing franchises such as WWE SmackDown, SpongeBob SquarePants, The Incredibles, Full Spectrum Warrior, and Warhammer 40,000. Although traditionally a slow quarter for all game companies, THQ is making plans for the future, such as increasing its staff size further, to 11 studios and nearly 1,000 employees, as well as opening a new studio in New York focusing on next-generation systems. Also notable in the financial results is THQ's diversification away from the handheld market, an area the company was formerly pre-eminent in. In the same quarter last year, 27.8% of THQ's games were on Game Boy Advance, compared to 16.9% in Q1 2006, although its wireless game market sales jumped from 3.2% to 6.5%. Overall, the company is maintaining its outlook for the year of $750 million in net sales and net income of $1.00 per share, very slightly under analyst estimates. In after-hours trading, THQ shares were down slightly to $35.67 from a high of $36.50 for the day.

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