They had little choice but to lower the price of uDraw. Profitability for the last quarter would have doubled ”were it not for uDraw.” Their over $30 million operating loss was a result.
Over 1.7 million units of uDraw had shipped for Nintendo Wii but the next-gen consoles never took to it. Peripheral-based products are much easier to sell with Nintendo Wii.
”Revenues were lower by about $100 million,” THQ CFO Paul Pucino announced.
”Where that $100m comes from is we have about 1.4 million units still in inventory that we haven’t sold that we planned on selling. If you think about an average price of about $56 or so, that accounted for a shortfall of about $80 million.”
”Then the million or so units that we did sell-in we had to sell at a lower price. That, coupled with software sales that are associated with uDraw being lower as well, totals about $100 million,” he continued.
”From a contribution margin perspective, we would have doubled the profitability in the quarter were it not for uDraw. So it was something in excess of $30 million in operating loss in the quarter as a result of uDraw.”
