THQ'S PREPARED FOR ANYTHING GAMES FIT WITH VARIETY OF CONSOLES.

Byline: Jesse Hiestand Staff Writer

CALABASAS - By designing video game titles for competing platforms, THQ Inc. expects to benefit regardless of whether Sony, Nintendo or Microsoft come to dominate the market with their next-generation consoles.

Company officials believe the strategy has contributed to the nearly 57 percent rise in stock value in the past quarter, making it one of the best performing companies in the greater San Fernando Valley area.

``Each of these new systems is going to fuel new software sales,'' said Peter Dille, vice president of marketing. ``Companies like THQ that are positioned as leading providers of software across all platforms can really take advantage of this new market growth.''

In the three months ending June 29, THQ's stock rose 56.92 percent to a close of $59.63.

Shares lost ground Friday, closing off 1.17 at $58.55.

In the past quarter, THQ announced games for PlayStation 2, Sony Corp.'s new console released late last year, as well as the upcoming Gamecube from Nintendo Co. Ltd and Microsoft Corp.'s first game console, the Xbox.

It also announced a new division dedicated to making games for handheld wireless devices like cell phones and PDAs.

Analysts say the stock is riding high because the video game industry is well as it enters the latest platform development cycle. These periods tend to occur every five years. The last was marked most notably by Sony's original PlayStation in 1995.

Analysts say several factors are expected to lead the industry to grow 30 percent to 35 percent annually over the next three years - inevitably boosting the bottom line of cross-platform designers like THQ and rivals like Electronic Arts Inc. of Redwood City.

The average age of game players continues to rise, to about 25 now, meaning that those who started a decade ago are migrating to the latest technology along with newcomers and, increasingly, women, said Arvind Bhatia of Dallas investment bank Southwest Securities.

``It's becoming more of a mass-market product,'' Bhatia said. ``If you have games for each platform, you capture growth for the whole industry.''

Other analysts suggest that industry optimism does not justify the overvaluation of THQ's stock, which now trades for about 52 times earnings.

``It might look expensive, but if you look at where the company and industry are going in the next few years, it makes sense,'' Bhatia said.

A weakening economy remains a concern, but sales of PlayStation 2 have been strong over the past six months despite the slowdown, he said.

THQ plans to report fiscal second-quarter earnings Thursday, and the consensus on Wall Street is that THQ will report profits of 13 cents per share.

Company officials also believe the stock has benefited from institutional investors looking for tech stocks with proven revenue models after getting burned by many dot-coms.

According to THQ, its market share in the first five months of 2001 was second only to Electronic Arts.

THQ plans to release about 55 new titles in 2001, most of which have yet to debut. Many are timed to take advantage of year-end holidays, when game sales tend to be strong. Already its Red Faction, a game designed in-house, was the best selling PlayStation 2 game in May.

Also this quarter, the company announced a new partnership with children's TV programmer Nickelodeon to jointly create and publish original video games that may later be turned into TV shows or movies. That would reverse the predominant industry trend of developing games based on established media franchises.

Previous projects between the two companies have included releases for PlayStation, Nintendo 64 and Game Boy Color  based on Nickelodeon's popular ``Rugrats'' characters.

THQ already works with Malibu-based Jakks Pacific Inc. to make video games based on World Wrestling Federation characters.

In May, THQ said it would partner with Disney Interactive to make games for Nintendo's Game Boy Advance and Game Boy Color based on the coming movie ``Monsters Inc.''

And at the industry's recent annual convention in Los Angeles, THQ showed one of the first wave of games for Microsoft's Xbox, the mission-based snowboarding title ``Dark Summit.''

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Photo:

Producer Sean Dunn road-tests THQ's upcoming Dark Summit video game, which will be released for the holidays.

Evan Yee/Staff Photographer