THQ highlights 1.2m uDraw units in Q3 earnings; wants more uDraw, fewer kids movie-based games

While a large slate of AAA titles is expected from THQ's Core Games unit in its Q4 2011 and 2012 fiscal periods, its fiscal Q3 2011 (October–December 2010) financial results are all about the less high-profile Kids, Family and Casual Business which had an unexpected hit with the North American release of uDraw Game Tablet for Wii last November. In less than two months, THQ managed to move over 1.2 million units in North America alone; an international release is expected "in the March quarter" (by the end of March this year).

And it's a good thing, too! THQ also "reevaluated the sales potential of games based on its kids movie-based licenses" for its Q3 statement and, "consistent with recent industry trends," it "lowered expectations for this category." That cost the company an impairment of $30.3 million which was excluded from its Q3 non-GAAP results (which we're getting to, hold on!). Instead of licensed kid's games, the Kids, Family and Casual Business is "increasing its focus on popular new play patterns and devices such as Kinect for Xbox 360, PlayStation Move, the uDraw GameTablet and Nintendo 3DS." Makes sense, right?

Now for the numbers: For the three-month quarter ending December 31, 2010, THQ posted net sales of $314.6 million, an eight percent drop year-over-year, resulting in a net loss of $14.9 million compared to a net income of $542,000 in the same period the previous year. In addition to the aforementioned $30.3 million impairment, THQ also excluded "a charge of $9.9 million related to the cancellation of Company of Heroes Online and WWE Online" from its non-GAAP results. So, with those things in mind, THQ reported non-GAAP net income of $28.5 million for the quarter compared with net income of $26.6 million for the prior-year period.

We're on the THQ earnings call now, and will report back any updates.