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GAMING NEWS

THQ's Future Looks Grim, Shares Drop By Nearly 50 Percent

Posted on Tuesday, November 6 @ 10:51:33 PST by Alex_Osborn

THQ has been struggling as a publisher for quite some time. Now, with the recent delays ofSouth Park: Stick of Truth,Metro: Last LightandCompany of Heroes 2, and losses totaling in at $21 million, the company's situation appears to only be getting worse.

According to a report from Reuters, THQ's stock has dropped a whopping 46% in a single day, which is clearly a very, very bad thing. Part of the drop in shares is being attributed the rather underwhelming sales ofVigil Games'Darksiders II.Currently, only 1.4 million units have been sold, and a total of 2 million in sales is required for THQ to break even on the game.

According to Wedbush Securities' Michael Pachter (via GamesIndustry), THQ will likely either facebankruptcyor sale.
Should its financial position continue to deteriorate, we expect THQ to raise financing through an equity sale that could lead to dilution of existing shareholders.

We expect creditors to be asked to renegotiate terms at a discount; if they are unwilling, bankruptcy is possible. Although THQ has been able to lower its cost structure through layoffs and a streamlined release slate in order to temporarily improve profitability, it is unlikely to return to profitability unless its revenues once again begin to grow.


Do you think THQ will be able to beat the odds and somehow dig themselves out of this terrible hole they currently find themselves in? Let us know what you think in the comments below.

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Related Games:   Darksiders II
Tags:   THQ
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