It is no secret that THQ’s financials have been in dire straights over the past year, but the situation took a turn for the worse today as the firm’s stocks tumbled 50 percent to $1.50 at closing, the biggest drop for THQ in more than two decades.
The news follows yesterday’s ominously brief quarterly earnings call in which CEO Brian Farrell reported yet another quarterly loss for the firm. One contributing factor cited in the call was Darksider 2 ‘s less-than-expected sales; in the second quarter, the game only managed to push 1.4 million copies.
THQ’s quarterly earnings call also saw the announcement that Company of Heroes 2 , Metro: Last Light , and South Park: The Stick of Truth have all been delayed. Farrell says that the developers need more time to “realize the games’ full potentials.”
In light of this, THQ says that it likely will have to seek additional capital from an outside source.
“The calendar movement for the release of games will likely create a need for additional capital,” the company said of its plans in an earnings report. “THQ has engaged Centerview Partners LLC to 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.”
Michael Pachter, an analyst with Wedbush Securities Inc., had this to say of THQ:
“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.”