Michael Pachter, the analyst watching the video game industry for Wedbush Morgan, believes that publisher THQ will soon be forced to sale its assets or to declare bankruptcy, after the company has recently announced significant delays for its biggest games.
In a note to investors, quoted by VG247, the analyst says, “Should its financial position continue to deteriorate, we expect THQ to raise financing through an equity sale that could lead to dilution of existing shareholders.”
He adds, “We expect creditors to be asked to renegotiate terms at a discount; if they are unwilling, bankruptcy is possible. Although THQ has been able to lower its cost structure through layoffs and a streamlined release slate in order to temporarily improve profitability, it is unlikely to return to profitability unless its revenues once again begin to grow.”
After THQ announced its worse-than-expected results and the delay of all its upcoming big video game projects, the shares for the company dropped quickly, closing the day 46 percent down and leading to its worst financial position ever.
THQ says that Company of Heroes 2 and Metro: Last Light will be launched later during fiscal 2014, after they were set to arrive before March 31 of 2013.
The publisher says that the extra time will allow teams working on the two games to improve their overall quality.
Some have speculated that the company simply lacks the resources it needs in order to fund the development of the games.
The biggest problem for THQ was the lackluster performance of Darksiders II, its biggest recent launch, which has failed to move the copies required to break even.
THQ had been troubled for some time, but the company planned to return to making a profit by terminating the development of most peripheral titles and focusing on core properties like Metro and Company of Heroes.