Video game publisher THQ, which has worked closely with several Hollywood studios throughout the years, is facing a delisting on the Nasdaq stock exchange. Thq_logo

The company, which has partnered with many Hollywood studios, including Dreamworks and Disney in recent years, has filed an 8K form with the Securities and Exchange Commission, announcing it has received a stock delisting notice from the stock market.

The notice was sent on Jan 25, when THQ shares traded under $1 for the 30th consecutive business day. And while it's certainly dire (and further rattled shaky investors today), it's not necessarily fatal.

THQ will have 180 days – roughly six months – from the point it receives the notice to turn things around and regain compliance, which means keeping its stock above the $1 mark for a minimum of 10 consecutive business days.

At the same time, the company will put together a plan to remedy the situation, in case the stock doesn't turn around naturally. Most commonly, this is done via a reverse stock split. It's expensive, time consuming and embarrassing, but it's also fairly effective – most of the time.

If, after that period, the stock's still not trading above the $1 mark, there's an opportunity for a hearing that could extend the probationary period.

Nasdaq, as a rule, prefers not to delist companies. When possible, they give them the benefit of the doubt. And if THQ can point to a strong lineup of games in development, that could be enough to convince Nasdaq to give it some extra time.

Of course, a delisting threat is far from the only trouble at THQ these days. Analysts have questioned the company's cash flow. Michael Pachter of Wedbush Securities, in December, wrote he believed "THQ is at risk of running out of cash by the June 2012 quarter" after the company's reduced guidance.

"With another unprofitable year expected in FY:12 (its fourth unprofitable year in the last five years), we expect the company’s cash balance to become an issue if it is unable to turn a profit in the first half of FY:13," said Pachter. "Given its declining licensed and core properties (apart from Saints Row), and an uncertain release schedule next year, we remain unconvinced that FY:13 will be profitable."

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