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Interpreting Newsweek's Thoughts On THQ's Earnings Call: Fiscal Comedy!

r_pad
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Posted February 4, 2009 - By r_pad

THQ had its earnings call today and I thought to myself, "Self, why don't you skip the call so that you can do other things. When it's all done, you can analyze someone else's comments -- you know, someone smarter than you." I agreed with myself and chose to see what Newsweek's N'Gai Croal thought of the call. N'Gai is way smarter than I am -- dude went to Stanford! Here's a bunch of N'Gai's thoughts followed by my snarky comments analysis.

"Red Faction or Red Ink? THQ's Q3 net sales down to $357.3 million from $509.6 million a year ago. Results in net loss of $191.8 million."

Well, it could be worse. EA and Motorola had dreadful quarters. I don't know what analysts were expecting (nor do I understand why they're so angry and shortsighted), but I can't imagine any of them expecting anything but a ton of red.

"THQ 'plans to reduce product development spending by an additional $70 million' through studio/project cuts and headcount reductions."

Firing people is always easier than spending less on licenses. *yawn*

"THQ shipment data: 2.6M Saints Row 2, 4M WWE Smackdown, 700K de Blob, 1.2M Big Beach Sports."

I'm actually surprised Big Beach Sports shipped that many units. Did anyone buy it? Or will it be a bargain-bin title at Target and Wal-mart stores across the nation? I'm not surprised at the WWE numbers. Next year's game will be even cooler because of the writing (I'll explain that soon).

"THQ CEO Brian Farrell: 'Clearly this is one of the most challenging holiday retail environments I have experienced in my 18 years atTHQ.'"

You ain't seen nothin' yet. B-B-B-Brian, you just ain't seen n-n-n-nothin' yet. (BTO rules!)

"He also said that although the market grew in 2008, 'we did not participate in that growth.' This Obama responsibility thing is catching."

N'Gai is so right! Btw, it was my fault the site was broken for 20 minutes today. I totally Magneto'd the CMS. Yeah, it was all me.

"New THQ kids games coming based on IPs from Marvel (Superhero Squad) and Dreamworks (Master Mind)."

See, I told you licenses were more valuable than employees. *sigh* My kingdom for originality!

"THQ developing WWE Online in Asia. Did not know this."

A-ha! There are some things you can't learn at Stanford. I bet if I got N-Gai in the figure four, he'd have no idea how to reverse it. Note to self: try this at DICE.

"'Our goal for next year is to return to profitability and generate cash,' based on a more focused lineup, says Farrell."

Translation: We're not going to launch new franchises in an economically challenging time like EA. I still disagree with this way of thinking. New IPs are a long-term investment. It irks me that Activision is being lauded for being Sequel Hut and THQ appears to be following suit.

"'Phased greenlight process' will ensure that fewer core games go into production at THQ. Devs hope phasers are set to stun, not kill.

Or would THQ be License Hut?

"Two WWE games coming from THQ. Legends, which is more arcade-y -- Andre the Giant makes virtual comeback -- and Smackdown Vs. Raw."

The writing in the next Smackdown Vs. Raw is legendary.

"Also coming: a game based on Pixar's Up. Grumpy seniors raised on Wii Bowling now have a hero of their own."

THQ am love teh licenses!

"THQ will release casual MMO Dragonica in North America."

Dragonica?!? I'm pretty sure she was an adult actress....

"'The most important thing to us right now is profitability,' says Farrell when asked about prospect of THQ increasing market share.

And the best way to do that is to fire people and hoard licenses, right, Brian?

"UFC game 'will launch in the June quarter.' Can't wait to Rampage."

I'm sure this title will do really well. UFC is so hot right now, like Hansel.

"'On core games, it's not about cutting marketing budgets, but spending the money more smartly', says Farrell, pointing to viral campaigns."

Firing people is also a great way to spend money "smartly"...if you want to keep your valuable licenses.

"UFC on PS3 and 360, but 'not exploiting older platforms like we do with WWE,' Farrell says. Sorry, PS2 owners."

This has always surprised me. UFC is hugely popular right now and I'd bet there are a good number of MMA fans that haven't made the jump to current-generation consoles. It seems like THQ is leaving money on the table here.

"$4-$6 million to make de Blob. Big Beach Sports more of a budget title, so it cost less. Big Beach Blob seems inevitable."

I'd play Big Beach Blob.

=-=-=-=-=-=-=-=-=-=

Anyway, that's my analysis of N'Gai's analysis (being meta is fun). I have to say, this was way more enjoyable than being on a conference call. It's easier to make fun of executives when you're not listening to them directly. I might have to do this again!
 
P.S. Sorry to drag your fine work down to my intelligence level, N'Gai. That's what you get for not following me on Twitter.

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Interpreting Newsweek's Thoughts On THQ's Earnings Call: Fiscal Comedy!
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