Saints Row publisher THQ has reduced its third quarter revenue outlook by a quarter following weaker than expected uDraw sales.
The company said today it now expects to report net sales approximately 25 per cent below its previously announced guidance of $510 million to $550 million.
"Despite uDraw’s strong success on the Wii in fiscal 2011 and market research indicating strong demand for uDraw on Xbox 360 and PlayStation 3, initial sales of our uDraw tablet and software on these high-definition platforms have been weaker than expected,” said THQ Brian Farrell.
“WWE ’12 and Saints Row: The Third are expected to perform at or better than the levels we discussed on our fiscal 2012 second quarter earnings call. As we continue to move through the third quarter, we are focused on driving sales of our key holiday titles and maximising profitability.”
In a research note distributed to investors earlier this week, Cowen & Company analyst Doug Creutz downgraded THQ shares from Outperform to Neutral, highlighting “very weak” demand for uDraw and pointing out that it is now being discounted by $20 at all major online retailers.
“Demand for THQ's other two key titles appears likely to support management's expectations (3MM+ units of sell-in for 'SR3' and a moderate y/y decline for 'WWE' on a diminished SKU count), but upside to these expectations appears unlikely to materialise based on our read of sales trends to-date,” he added.
Last month, following the publication of significantly increased losses for its second financial quarter ended September 30, Farrell said THQ was “planning for the largest quarter in our history, in terms of sales and earnings”. The company expects to announce its third quarter results in early February 2012.