Shareholders sue THQ over uDraw misguidance
18th Jul 2012 | 20:21
Shareholders are suing THQ for 'misleading' claims regarding its disastrously failed uDraw peripheral.
uDraw is a game tablet that left THQ with around 1.4 million unsold units by February 2012, resulting in a revenue shortfall of around $100 million. The sales disaster is widely considered as what triggered THQ's wider financial troubles.
Now the publisher faces legal troubles as New York law firm Levi and Korsinsky files a lawsuit on behalf of shareholders who claim "THQ and certain of its executive officers issued false or misleading statements concerning the Company."
According to the filing, "It is alleged that defendants misrepresented or failed to disclose that: (a) the Company's uDraw GameTablet ("uDraw") for Microsoft Xbox 360 and Sony PlayStation 3 was not being purchased by owners of those gaming systems; (b) because demand for uDraw was below internal expectations, the Company would have to take back, or provide price protection, on hundreds of thousands of units that it had sold; and (c) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects."
THQ faced similar heat from Georgia law firm Holzer & Fistel LLC, who was asked to investigate whether THQ had "failed to disclose information in a timely manner about the decreased demand for uDraw on the Xbox 360 and PlayStation 3".