THQ Inc. F1Q10 (Qtr End 6/30/09) Earnings Call Transcript

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2009-07-28 18:14:20.0

Tags: Revenue, Opex Corp., Call Transcript, THQ Inc., Earnings, Operational Accounting, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Jeetil Patel – Deutsche Bank.

Jeetil Patel – Deutsche Bank

On the WWE royalties that are coming down about 40%, I guess it's your view that you let that flow through to the bottom line or look to reinvest that into newer initiatives. Second, can you give us a rough breakdown of the revenues by the three different core groups, segments that you're now giving, breaking down and maybe an idea which ones are probably the relatively speaking the faster growth rates versus slower of the three. And then lastly, on OpEx, I guess there's been obviously a lot of restructuring and cost cutting in the business. Is the fiscal 1Q OpEx run rate a good proxy to use as we try to look at the business for the balance of the year and into 2011?

Brian Farrell

With respect to the WWE, we're going to let that flow through to the bottom line as far as we know now. Obviously, that's just a net win for us so that's something we would expect to flow through.

With respect to revenue breakdown for the business units, the business units are still completing their formal business plans so we don't have the entire breakdown by business units yet. But what I would say is the biggest one, just because it's the largest segment is the core games units since it comprises action, fighting, racing strategy etc., followed by the kid's family and casual.

And then online as you know, we don't have significant online revenues at this time, but that's the area that I would characterize as the largest growth opportunity, especially as you take a three to five year time horizon.

Paul Pucino

With respect of OpEx, Q1 is indeed a good proxy for Q2 and Q4. However, the holiday season of Q3, we would anticipate in particular selling and marketing expenses to be higher given that our revenues are so much higher.

Operator

Your next question comes from Edward Williams – BMO Capital Markets.

Edward Williams – BMO Capital Markets

Looking at the Jacks royalty rate, can you just point out that this is through 2009? What happens post 2009? And then looking over a UFC for a moment, how has the product been performing international markets at this stage and how does it compare to WWE as a proxy?

Paul Pucino

 

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