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THQ Swings To Profitability In Q3 As Market Share Rises

THQ is in the black for its fiscal Q3, moving to a $542,000 profit from last year's $191.8M Q3 loss, with UFC 2009 Undisputed a strong seller. [UPDATE: Drawn to Life sells 3 million, CEO comments on Natal and "Sony Arc."]
Publisher THQ posted financial results for its 2010 third fiscal quarter, moving to a profit of $542,000 from a $191.8 million loss in that period the previous year, with UFC 2009 Undisputed a standout performer for the company. Revenue for the quarter, which ended December 31, was essentially flat, dropping 0.17 percent to $356.7 million from $357.3 million. Sourcing industry tracking firm NPD, THQ says it increased its calendar 2009 market share in the U.S. to 4.7 percent, ranking as the number four independent publisher for that market. THQ also saw success with The Biggest Loser, which launched in October for Wii and Nintendo DS, calling it "the #1 best-selling fitness game by an independent publisher in the US for the December quarter." [UPDATE: In a conference call, following the results, Farrell revealed that the Drawn to Life platformer franchise, conceived by 5th Cell, has now sold in excess of 3 million units. The "latest" entry -- likely referring to combined sales of 5th Cell's Drawn to Life: The Next Chapter on Nintendo DS and Planet Moon's parallel Wii version -- has sold over 1 million units since its October launch. Farrell also addressed upcoming motion control additions from Sony and Microsoft, notably referring to Sony's product as "Arc," corroborating recent rumors surrounding the device's name. As for the two company's motion-controlled peripherals in general, he said, "We want to be there at launch" but "we're not overinvesting in those. As we always do, we like to see...install base before we aggressively go after it" Either way, he noted, the resultant potential mass market expansion of Xbox 360 and PlayStation 3 install bases is "a huge win for us."] Overall, THQ expects to bring in $175 million to $185 million. in revenue in its fiscal fourth quarter, ending March 31. The company also reiterated its expectations of raising revenue for the fiscal year overall, and bringing the company to full-year profitability. It did not give specific profit expectations. In the current quarter, THQ says it is looking to key releases Darksiders, Metro 2033, and Warhammer 40,000: Dawn of War II - Chaos Rising to drive revenue. Darksiders has already shipped 1.2 million units to retailers, the company said. The company was able to achieve profitability despite essentially unchanged revenue figures largely by lowering its operating expenditures significantly from its previous fiscal year and quarter. Furthermore, for the nine months that ended December 31, THQ cut its total operating expenses by 46.6 percent, and significantly lowered its stock-based compensation costs and business restructuring expenditures. As for the industry as a whole, Farrell said, "We believe industry software dollars sales will be flat to up single-digits in North American and Europe," driven mainly by Xbox 360 and PlayStation 3 software sales."

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