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THQ misses Street on weak game sales, cuts forecast

By Liana B. Baker

Feb 2 - THQ Inc's cut its annual earnings forecast on Thursday and told investors it would become a much smaller video game company with half the volume of sales next year.

The lowered forecast comes a day after the company announced 240 layoffs at its various development studios. It also received a warning from Nasdaq this week that its shares may be delisted if it does not boost its stock price over the next six months.

The company's shares fell 17 cents, or 22 percent, to 59 cents per share in extended trading on Thursday.

For the fourth quarter, the company expects net sales to be $130 million to $150 million and a net loss of 35 cents to 50 cents per share.

While the company did not provide specific sales numbers for next year, Chief Financial Officer Paul Pucino told analysts the company's sales in fiscal 2013 would be roughly half of this year's.

"We are going to be a smaller company," Chief Financial Office Paul Pucino told analysts on a conference call on Thursday.

In the third quarter, the company missed its financial targets, which it blamed on sales of its casual and family games

being much weaker than expected during the holiday season. It is now shutting down production of one of its family products, the uDraw game tablet.

THQ is having a hard time competing against bigger rivals such as Activision Blizzard Inc and Electronic Arts Inc that have more cash to invest in big budget video games. Sales of traditional video game products have been shrinking in recent years as consumers turn to cheaper games online made by companies such as Zynga Inc.

THQ's competitor, Take-Two Interactive Software Inc posted a net income on Thursday that beat Wall Street estimates.

THQ's publisher's sales fell 3 percent to $305.4 million in its fiscal third-quarter. Its net loss widened to $55.88 million, or 82 cents per share, compared with a loss of $14.95 million, or 22 cents per share a year ago.

Adjusted for the deferral of digital revenue, the company reported net income of $24 million, or 35 cents per share. This missed Wall Street expectations of 65 cents per share according to Thomson Reuters I/B/E/S.

(Reporting by Liana B. Baker; editing by Bernard Orr and Andre Grenon)

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