THQ is in a lot of trouble lately. Dropping share price, lay offs, revenue drying up. Last month, a group of anonymous current and ex-employees published an open letterdirected at THQ’s board of directors. They named and shamed the board and singled out the heavily invested yet massive failure of a game uDraw as a key reason for the recent lay-offs.
The fact is that the CEO and executive committee were so focused on trying to hit an unrealistic financial goal that they bet everything on an extremely risky proposition in the uDraw tablet. When they lost, they further displayed their lack of management skills by not having a contingency plan. Three weeks after the game launched, an entire business unit was wiped out when it didn’t meet its goal due to relying on that one product to hit an unrealistic target…
This Board has allowed the Brian Farrell, the CEO, the ongoing ability to take a cash-rich profitable company and drive it from a $30 share price down to around $.70 without acting despite numerous mistakes that even for those lacking business training, could see were errors. Even without glaring mistakes how can the same CEO stay in charge after a 99% share price loss? Aside from the board, who is responsible for the current situation and who is accountable for the current and future job losses at the company? When you ask the recently departed who are a good source of information, you get the same answers. This uDraw failure is the largest and most recent one in a string of them that were hushed over and hidden. The answer aside from the Board is the current executive team that allowed this uDraw implosion to happen.
No grudges there that i can see… If you would like to read the rest of it you can head over to the link and have a read here. The interesting bit is the CEO has finally stepped up to the shooting line. In a conference call to investors, President and CEO Brian Farrell has admitted that his punt on the uDraw was a colossal mistake:
uDraw hardware and software sales were approximately $100 million below our plan, and our other casual titles were approximately $25 million below plan, substantially reducing our revenue and profits for the quarter. We were confident that uDraw would resonate again this holiday, given last year’s robust sell-through and 2 independent studies indicating we were addressing a sizable market on the HD platforms. Our confidence was misplaced. What we had viewed to be a product that would generate revenues and profits while we continued to build our portfolio of core gaming franchises has instead created a catalyst for us to evaluate our business from top to bottom…
We were looking at uDraw as a bridge to the digital future, and it turned out to be a plank that we walked off of.
Expect some specials on the game soon I guess….
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