THQ Facing Sale Or Bankruptcy In Grim Future

Toy Headquarters T*HQ, now known simply as THQ,  is likely facing a sale or bankruptcy, following continued poor financial results.

THQ’s financial report, along with the news that release dates for South Park, Metro: Last Light and Company of Heroes 2 had all been pushed back. South Park is the biggest hit, now pushed back to ‘fiscal year 2014′. The company’s next move was to hire Centreview Partners to find “strategic and financing alternatives” for the company – a term associated with the search for a sale. Following second quarter financial losses of $21 million on Monday, the firm refused to take calls from investors on the advice of Centreview.

On Centreview’s hiring, a THQ statement explained that the accountants would “assist the company in evaluating strategic and financing alternatives intended to improve THQ’s overall liquidity, including raising additional capital, preserve the company’s ability to bring the best possible games to market during the most advantageous release windows and to help address the $100 million 5% convertible senior notes due August 2014.”

“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,” commented Wedbush Morgan’s Michael Pachter in a note to investors. “We do not believe THQ is investable for most institutions.”, He added.

Pachter believes that, unless revenues begin to grow THQ is unlikely to return to profitability despite, their recent layoffs and their  streamlined release slate. Chief Executive Officer of THQ had this to say, ”I firmly believe releasing our fourth quarter titles without extra time for polish in the current environment would lead to underperformance that could in turn lead to future additional capital shortfalls. But extending development schedules in order to make the best possible titles also has financial implications. Yet there can be no doubt which path has the greatest chance of leading to the long-term success of the company. We must follow the course that generates the highest quality games, and will establish THQ as a mark of quality for the consumer”.

What’s your take on THQ’s situation? Was its slate of software up to scratch or could more have been done to help avoid losses? Let us know below.


Adetunji Openiyi

Creative Tech Disciple. Studying Computer Engineering at Kharkov National University of Radioelectronics. Photographer, Graphic Designer, Producer, follow on Twitter @S_Hype.

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