Piper Jaffray Comments On THQ Inc.'s Quarter, Disappointing Guidance

THQ THQI reported December quarter revenues and EPS above consensus expectations, but guidance disappointed including a key title delay. Piper Jaffray lowered its sales and EPS estimates and expect a wider loss to year-end. THQ has done a solid job of realigning the company with a lower cost structure and continues to prep the business for a return to profits during FY12. THQ reported December quarter non-GAAP sales of $323M on an easy -7% compare vs. consensus at $316M. Non-GAAP EPS came in at $0.37 vs. consensus at $0.26; GAAP loss per share was $0.22. December quarter revenue upside was driven by 1.2 million units of uDraw and 2.7 million units of WWE Smackdown. Piper Jaffray's FY11 revenue estimate moves from $846M to $814M, while our non-GAAP loss per share widens from $0.10 to a loss per share of $0.32. Company guidance for FY11 calls for non-GAAP net revenues in the range of $800M-$815M and non-GAAP EPS of $0.25 to $0.35 loss per share. Piper Jaffray has a $7 PT and Neutral rating on THQI THQI closed Wednesday at $6.41