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THQ planning reverse stock split to avoid NASDAQ delisting
THQ filed plans with the SEC Friday for a June 29 stockholders meeting, where the company will propose a reverse stock split to avoid delisting from NASDAQ.In the filing, the company describes the need for the stock split to maintain the $1 per share minimum that NASDAQ requires for listing. THQ outlined three options in the process: 1:3, 1:5, and 1:10 reverse stock split ratios. Exercising any of these options results in fewer outstanding shares with an increased apparent value per share. For instance, should THQ perform a 1:3 reverse stock split, each stockholder would own one stock for every three owned prior to the split, even though the total value of the company's stock would not change.The company's stock is currently trading at 61 cents per share.THQ first received a delisting warning from Nasdaq on January 31, noting that the company's stock was trading below $1 per share. It has until July 23 to meet-and-maintain that closing standard for ten consecutive business days in order to be eligible for continued listing. THQ recently reported a net loss of $239.9 million for the fiscal year ending on March 31, 2012.
THQ stock option investigation over
Today seems to be a good day for video game publishers. First, Activision cleared up its stock option problems. Now THQ (THQI), the other video game company that had some 10-Q problems, is also out in the clear. Much to the relief of investors and THQ, the investigation into THQ's stock option plans was completed; happily for everyone, no fraud was found. The only inconsistency involved in an increase of $11 million in after-tax expenses. THQ is in the same situation as Activision. Both had stock option problems, both had that monkey pulled from their back and both are expected to have a good 2007. Their insistence on heavy Wii support is the reason. Let's hope we get some more good publisher news to add to these two.
What investors think of THQ today
THQ has outshone its games-publishing peers with a stock price (Nasdaq: THQI) that's actually gained in value over the last year. That's actually quite an accomplishment in an industry beset by fear that we're headed towards some sort of doomsday scenario during the difficult console transition period. (The graph above is from a report published by games industry analysts Jason Kraft and Chris Kwak of Susquehanna Financial Group.) The graph shows how well THQ management has done insulating the stock from the shocks and jolts that have bruised its competitors. Best-selling THQ game Destroy All Humans has a lot to do with this.
