THQ Warns of Industry Slowdown; EA Posts Quarterly Profit

[Steve]

"THQ also took the opportunity to reduce its forecast of industry growth to 10%-15% from its previous estimate of 20%-25%, taking a more pessimistic view of the industry’s fortunes than most of its competitors. The news cast a pall over the stocks of video game publishers and retailers this week, with many of them dropping sharply on the news.

Many analysts speculated that THQ’s gloomy outlook might have more to do with internal company issues than industry-wide factors.

For its part, Electronic Arts has helped to restore some industry optimism by posting results well in excess of Wall Street’s expectations for the second consecutive quarter.

In its fiscal second quarter, EA posted a net profit of $50 million, or 34 cents per share. A year ago, it posted a loss of $32.8 million, or 28 cents a share. EA’s quarterly revenue was $453 million, up from $240.2 million last year. The estimates had ranged from 5 to 24 cents per share.

EA also raised both its Q3 and full-year guidance, saying it expected to earn between $1.52 and $1.60 per share on revenue between $1.075 and $.175 billion in its third quarter. EA expects its fourth quarter earnings to be between $2.24 and $2.32 per share on earnings of $2.3 billion to $2.4 billion.

EA plans to delay some upcoming titles like “SimCity 4” for the PC and “The Sims” for Sony’s PlayStation 2, in the hopes to avoid crowding out other titles during the critical holiday selling season.

The company also said that EA.com, its online unit, saw revenues increase 23% to 19 million. Its operating loss dropped 27%, to $23 million.

“The Sims Online”, an upcoming online subscription title, had been expected to help EA.com break even in the fourth quarter but the release of the game is being pushed to December, a delay of several weeks. The game will sell for $49 at retail and carry a $10 per month subscription price."