THQ Sees FY 10 Profit; Betting on the Old Ultraviolence
THQ (THQI) shares are posting a fat gain today after the videogame company announced that it has completed a previously announced cost-reduction plan designed to chop its annual spending by $220 million.
THQ CEO Brian Farrell said in a statement that the company’s goal is to return to profitability and generate positive cash flow in the March 2010 fiscal year, and to position the company for long-term sustainable growth.
The company said March quarter results will include $45 million in “realignment expenses,” including $4 million in cash costs. The restructuring includes cutting its SKUs by about 20 percent and closing or selling four of its game development studios. The plan: producer fewer, better games.
Kaufman Bros. analyst Todd Mitchell this morning pounded the table on the stock, repeating his Buy rating and $6 target price, and asserting that there are near-term catalysts ahead for the stock. Weirdly, the note actually says that the company will “soon announce its restructuring is complete,” and of course they announced exactly that this morning. (He should have issued the note a day earlier, I’d say.)
