THQ Slashing Up To 240 Jobs In Restructuring
THQ will cut “up to 240 selling, general and administrative” jobs globally in a new restructuring plan, it said in a filing at the SEC Wednesday. The cuts will be part of “a realignment of the organizational structure” of the company, it said. Most of the restructuring plan is expected to be implemented by March 31, with the remainder to be finished by Sept. 30, it said.
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THQ said Q3 revenue fell to $305.4 million from $314.6 million in Q3 last year, while its loss widened to $55.9 million, or 82 cents a share, from $14.9 million, 22 cents. Earnings from Saints Row: The Third and WWE ‘12 “were offset by poor results” for uDraw hardware and software, it said. Weaker uDraw revenue, along with “high inventory reserves, price protection, and concessions at retail” had about a $33 million impact on operating income in Q3, it said.
The publisher projected that implementation of the restructuring plan will result in special charges of up to $11 million that it said will be recorded mainly during Q4 of fiscal 2012 ending March 31. The charges will mainly come from severance costs for affected employees, estimated at about $8 million, and potential charges related to other fixed assets that THQ said “may be abandoned,” estimated to be up to $2.5 million, and contract terminations, estimated at about $500,000. Of the total charges, $8.5 million are expected to be cash expenditures, it said. Of the cash expenditures, about $4.5 million is expected to be paid in Q4, about $2.5 million is expected to be paid in Q1 of fiscal 2013 ending June 30, and the remainder after that, it said. But THQ said the amounts were just preliminary. The charges and cash expenditures didn’t take into account any “potential cost savings” from the restructuring, it said.
The company also said in the filing that CEO Brian Farrell agreed to cut his base salary for one year by 50 percent, to $359,250, starting Feb. 13. THQ is also reducing cash payments to its board by 50 percent for a year, it said.
THQ said early this week that it cut an unspecified number of jobs in its administration and publishing organization (CED Jan 31 p6). The company said last week it was exiting the kids’ licensed games category to focus on its core game franchises and developing digital initiatives (CED Jan 26 p10). THQ said that on Jan. 26 it initiated the restructuring plan “to appropriately adjust” operating expenses “to better align with the expected revenues under the updated strategy.”
Shares in the company fell Tuesday after THQ said in a filing at the SEC that it received a Nasdaq delisting notice (CED Feb 1 p10). Wedbush analyst Michael Pachter said Thursday “we do not believe the warning from Nasdaq is cause for concern at this point.” Such warnings are “not uncommon,” and its share price “may improve sufficiently to satisfy” Nasdaq’s minimum share price requirement if THQ can “successfully show that its restructuring plan has merit, and the titles it plans to produce focus on its core franchises,” he said. THQ shares closed 5.56 percent higher at 76 cents Thursday.
Separately, THQ provided details Thursday for extensive downloadable content plans and a Season Pass Program for UFC Undisputed 3, the latest entry in its mixed martial arts videogame franchise. The content offerings will include a wide variety of new fighters, UFC fights and early access to unlockable content, and will be made available via the Xbox Live Marketplace for the Xbox 360 and the PlayStation Network (PSN) for the PS3, it said. UFC Undisputed 3 will ship Feb. 14 for the two consoles.
The downloadable content program will include two Fighter Packs (a Fight of the Night Pack costing 400 Microsoft Points for the 360 and a comparable $4.99 for PSN in March, and an International Pack at the same pricing following in April), three Ultimate Fights Collections (Ultimate Submissions and Ultimate Rivals collections that will be free at launch, an Ultimate Upsets collection to be released in March at the same pricing as the Fighter Packs and a Mixed Bag collection in April at the same pricing), UFC contender Alistair Overeem as a playable character at launch for consumers who participate in a limited time promotional offer on Facebook costing 80 Microsoft Points for the 360 and 99 cents at PSN, a Create-a-Fighter Boost at launch for 240 Microsoft Points for the 360 and $2.99 for PSN, and an All Unlockables offering at launch for 160 Microsoft Points for the 360 or $1.99 for PSN.
THQ also said consumers will be able to pre-purchase select downloadable content at a reduced price point through the UFC Undisputed 3 Season Pass Program. For a one-time cost of 1,360 Microsoft Points for the 360 or $16.99 for PSN, they will receive the Fight of the Night Pack, International Pack, Ultimate Upsets, Mixed Bag, Alistair Overeem and the All Unlockables offering. Customers who pre-order the game from the shopTHQ e-commerce website for either console will receive the Season Pass for free, with free standard shipping in the U.S. and Canada, it said.