Gamemakers fail to punch Street buttons

THQ, Atari shares dip on news; Midway closes up 2%

HOLLYWOOD — Three top vidgame publishers failed to impress Wall Street with earnings for the second quarter: THQ, Atari and Midway came in either at or under investor expectations.

THQ, which has been the No. 2 publisher, saw its first quarter in a while without help from a licensed blockbuster such as last year’s “Finding Nemo”; it saw net sales decline 10% from a year ago to $88.2 million, while its net loss widened 8% to $3.9 million. Both results were roughly in line with its previous guidance.

Company, which has largely appealed to younger players, has a number of games based on holiday movies on tap for later in the year, though, including “The Polar Express,” “The Incredibles” and “The SpongeBob SquarePants Movie.” “Incredibles” and “SpongeBob” games come from deals THQ has with Pixar and Nickelodeon, respectively.

But THQ shares were down 10% in after-hour trading thanks to lower-than-expected guidance for the current quarter.

Atari, meanwhile, saw its shares plunge 18% in after-hours trading Thursday after it disappointed investors with guidance for the current quarter. In the second quarter, its net income was $12.1 million, down 49% from the same period a year ago, on revenue of $110.3 million, which declined 27%.

Company maintained its guidance for the fiscal year ending next March, though, and said its recently released “Driv3r” is selling extremely well.

Meanwhile, Midway, recently taken over by Viacom topper Sumner Redstone, reduced its net loss to $9 million from $54.8 million a year ago. Company would have turned a small profit if not for large severance payments to two recently departed execs. Rev was $47.3 million, up 12% from the same quarter a year ago.

Midway also said it expects a strong holiday season that will bring its first profitable quarter since 1999. And starting in first quarter 2005, Midway will have the PC publishing rights for the next several games in the highly popular “Unreal Tournament” series from Epic Games.

Midway shares closed up 2% at $11.29 on Thursday after reporting earnings on Wednesday. Atari and THQ, which both reported after markets closed Thursday, saw their shares close up 3% at $2.33 and up 3% at $20.40, respectively.

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