THQ shares collapsed Thursday, falling 5 3/4, or 39 percent, to a 52-week low of 8 15/16 after the video game maker warned of lower-than-expected sales and earnings for the second half of the year.
THQ (Nasdaq: THQI) said it now expects to post a loss between 13 cents and 15 cents a share in its second quarter on sales of around $30 million.
It will also take a one-time charge of $9.8 million to write off some discontinued inventory.
On Thursday, Banc of America Securities slashed the stock from a "strong buy" recommendation to a "market perform."
Analysts were expecting THQ to earn 3 cents a share in the second quarter.
For the fiscal year, the Calabasas Hills, Calif. company expects to earn between $1.10 to $1.20 a share on sales of $325 million to $340 million, well below the $1.95 a share profit analysts had predicted.
Last quarter, THQ managed to beat analysts' reduced earnings estimates, posting a profit of $4.7 million, or 23 cents a share, on sales of $70.3 million.
However, analysts were originally expecting a profit of 55 cents a share before the company preannounced disappointing sales and earnings.
"The slowdown in the software market for the current generation of video game consoles will affect our financial performance this year," said CEO Brian Farrell in a prepared release. "While we continue to be optimistic about revenue growth for the year as a whole, we see the current softness in the market continuing at least through the third quarter."
THQ said the lackluster performance was a result of heavy investments in marketing and developing games for new systems like the PlayStation 2, which goes on sale in the United States later this year.
It also sees a slowdown in the overall Nintendo 64 and PlayStation markets as consumers shift attention to new hardware, and a strong U.S. dollar and start-up costs for offices overseas.
THQ shares hit a 52-week high of 39 1/4 in December after falling to a previous 52-week low of 13 3/4 in June.
Four of the seven analysts covering the stock rate it either a "buy" or "strong buy."