THQ will be cutting 24 percent of its workforce, or around 600 employees, as the company aims for profitability in the next fiscal year.
Net loss for the third quarter ended December 31 mounted to $191.8 million, including a non-cash charge of $118.1 million related to goodwill impairment. That's compared to net income of $15.5 million for the same period a year ago.
Net sales were $357.3 million for the quarter, down from $509.6 million year-on-year.
"We delivered high quality games to market this holiday season but fell short of our revenue and profit targets in this challenging environment," said Brian Farrell, THQ president and CEO in a statement.
"We are taking highly targeted actions with the objective of investing in games with the highest franchise potential and returning to profitability."
THQ has initiated its previously announced plan to reduce its cost structure by $120 million. Farrell said due to the "continued economic weakness," the company will reduce costs by an addition $100 million.
The firm said it would reduce costs in "each functional area," slashing product development spend by an additional $70 million through "studio dispositions and other project and headcount reductions." Sales, marketing and corporate expenses will also be reduced "through headcount and other costs reductions." The company hopes to save an additional $30 million annually.
With headcount reductions come "significant" charges related to severances, most of which will be recognized in the remainder of the fiscal year, THQ said.
The firm provided no financial guidance. Key releases during Q4 include Warhammer: Dawn of War II on PC, WWE Legends of WrestleMania on Xbox 360 and PS3, 50 Cent: Blood on the Sand on Xbox 360 and PS3, and Deadly Creatures on Wii.
Wow that is a fair amount of staff they are cutting! Shame that so many will lose their jobs but hopefully this will not affect the quality of their games in the future.
