Electronic Arts Proposes to Acquire Take-Two Interactive Software for $26 Per Share in Cash, or Approximately $2.0 Billion

REDWOOD CITY, Calif. –(Business Wire)– Feb. 24, 2008 Electronic Arts Inc. (”EA”) (NASDAQ: ERTS) today announced that it has proposed to acquire Take-Two Interactive Software, Inc. (”Take-Two”) (NASDAQ: TTWO) in an all-cash merger valued at approximately $2.0 billion.

EA’s proposal of $26 per share in cash represents a premium of 64 percent over Take-Two’s closing stock price on Feb. 15th, the last trading day before EA sent its revised proposal to Take-Two, and a 63 percent premium over Take-Two’s 30-day trailing average price over the thirty trading days ending on that date.

EA’s proposal was contained in a letter sent on Feb. 19th by EA Chief Executive Officer John Riccitiello to Strauss Zelnick, Executive Chairman of the Board of Directors of Take-Two. The Take-Two Board’s subsequent rejection of the EA proposal led to EA’s decision to release the letter and bring its proposal to the attention of all Take-Two shareholders.

Mr. Riccitiello said today: “Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two’s game designers would also benefit from EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities.”

The EA letter warned that further Take-Two delay in accepting EA’s proposal could prevent Take-Two’s shareholders and other constituents from realizing its benefits. “There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today,” Mr. Riccitiello wrote. The letter added that timely completion of the proposed transaction would allow EA’s strong publishing and distribution network to positively impact the ongoing post-launch sales of GTA IV and support the new Take-Two titles scheduled for launch later in the year and during the holiday selling season.

As noted in EA’s Feb. 19th letter, EA’s proposal is not conditioned on any financing requirement. It is, however, subject to certain customary conditions as set forth in the letter. EA’s $26 per share proposal is based on the current equity capitalization of Take-Two. Although EA indicated in the letter that its proposal was subject to negotiations commencing by Feb. 22nd, EA intends to keep its proposal open for the present to give Take-Two’s shareholders and Board of Directors further time to consider it.

The full text of EA’s letter to Take-Two follows: -0-

February 19, 2008

Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.’s (”EA’s”) $25 per share cash offer to acquire Take-Two Interactive Software, Inc. (”Take-Two”) and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA’s offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two’s most recent closing price and a 63% premium over Take-Two’s 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two’s creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two’s talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two’s studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two’s shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two’s shareholders, because:

– There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA’s strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year’s holiday selling season.

– We believe Take-Two’s current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

– With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EA’s shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two’s and EA’s corporate and publishing infrastructures and by optimally supporting Take-Two’s creative teams and intellectual properties in EA’s decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two’s shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two’s shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22. -0-

Sincerely,

John Riccitiello
Chief Executive Officer

Conference Call

Electronic Arts will host a conference call on Monday, February 25, 2008 at 5:00 am PT (8:00 am ET) to discuss its proposal to acquire Take-Two Interactive and may disclose other material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number: (877) 795-3647, access code 220497, or via webcast at http://www.eatake2.com.

A dial-in replay of the conference call will be provided shortly after the call ends and remain available until March 3, 2008 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available shortly after the call ends at http://www.eatake2.com.

About Electronic Arts

Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world’s leading interactive entertainment software company. Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet. Electronic Arts markets its products under four brand names: EA SPORTS(TM), EA(TM), EA SPORTS BIG(TM) and POGO(TM). In fiscal 2007, EA posted revenue of $3.09 billion and had 24 titles that sold more than one million copies. EA’s homepage and online game site is http://www.ea.com. More information about EA’s products and full text of press releases can be found on the Internet at http://info.ea.com. For more information about EA’s proposal to acquire Take-Two, please visit http://www.eatake2.com.

Additional Information and Where to Find It

This communication is for informational purposes only and does not constitute an offer to buy any securities or a solicitation of any vote or approval or a solicitation of an offer to sell any securities. This material is not a substitute for the proxy statement Take-Two would file with the SEC if an agreement between EA and Take-Two is reached or any other documents which EA may file with the SEC and send to Take-Two stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF TAKE-TWO ARE URGED TO READ ANY SUCH DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders will be able to obtain free copies of any documents filed with the SEC through the web site maintained by the SEC at http://www.sec.gov. Free copies of any documents filed by EA with the SEC can also be obtained by directing a request to EA, 209 Redwood Shores Parkway, Redwood City, CA 94065, telephone: (650) 628-1500.

EA and its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding EA’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended March 31, 2007, which was filed with the SEC on May 30, 2007, its proxy statement for its 2007 annual meeting of shareholders, which was filed with the SEC on June 20, 2007, and Forms 8-K, which were filed with the SEC on June 6, 2007 and July 17, 2007. Other information regarding the participants in a proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in any proxy statement filed in connection with the proposed transaction.

Forward-Looking Statements

Some statements set forth in this press release, including those regarding EA’s proposal to acquire Take-Two and the expected impact of the acquisition on EA’s strategic and operational plans and financial results, contain forward-looking statements that are subject to change. Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause results to differ materially from the expectations expressed in these forward-looking statements include the following: the possibility that EA’s proposal to acquire Take-Two will be rejected by Take-Two’s board of directors or shareholders; the possibility that, even if EA’s proposal is accepted, the transaction will not close or that the closing may be delayed; the effect of the announcement of the proposal on EA’s and Take-Two’s strategic relationships, operating results and business generally, including the ability to retain key employees; EA’s ability to successfully integrate Take-Two’s operations and employees; general economic conditions; and other factors described in EA’s SEC filings (including EA’s Annual Report on Form 10-K for the year ended March 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended December 31, 2007). If any of these risks or uncertainties materializes, the proposal may not be accepted, the acquisition may not be consummated, the potential benefits of the acquisition may not be realized, EA’s and/or Take-Two’s operating results and financial performance could suffer, and actual results could differ materially from the expectations described in these forward-looking statements. All information in this press release is as of February 24, 2008. EA undertakes no duty to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Electronic Arts Inc.
Tricia Gugler, 650-628-7327
Director, Investor Relations
or
Jeff Brown, 650-628-7922
Vice President Corporate Communications

Starbucks Makes Organizational Changes to Enhance Customer Experience

SEATTLE–(BUSINESS WIRE)–As part of the Company’s recently introduced Transformation Agenda, Starbucks (Nasdaq:SBUX) communicated several organizational structure changes to its partners (employees) that will better focus efforts on enhancing the customer experience. Additionally, at the Starbucks Annual Meeting on March 19, Howard Schultz, president, ceo and chairman, will outline five key strategic customer-facing initiatives that will continue to transform the customer experience.

Schultz sent the following email to all Starbucks partners earlier today:

__________________________________________________________________

Dear Partners,

Since I returned as ceo six weeks ago, we have experienced a lot of change in a very short period…with our renewed focus on the customer experience and the return to our core–all things coffee–as evidenced by our decision to discontinue warmed breakfast sandwiches in U.S. stores by the end of Fiscal ’08; unprecedented Art of Espresso three-hour training for U.S. store partners on February 26; free WIFI for partners and customers beginning in the Spring, and more to come. I hope you view these changes as positively as I do. Together, we have created a blueprint to transform the company, and I sincerely appreciate all that you have done and will continue to do every day on behalf of Starbucks.

I pledged to communicate with you about our efforts to improve the current state of our U.S. Business, reignite the emotional attachment with our customers and make foundational changes to our business; and I have done so in six previous emails. However, this is my most difficult communication to date.

As I have mentioned in previous communications, in order to reinvigorate our company we must continually analyze and review every part of our company operations. This rigorous look at our business will ensure that we are managing and optimizing our resources as effectively as we can in order to improve the Starbucks Experience.

We realize that we are operating in an intensely challenging environment, one in which our customers and partners have extremely high expectations of Starbucks. And we have to step up to the challenge of being strategic as well as nimble as our business evolves. Unfortunately, we have not been organized in a manner that allowed us to have a laser focus on the customer.

Over the last several weeks, we conducted a thorough organizational analysis, which was, at times, very emotional and extremely stressful. But as I sit at my desk and think about my responsibility to over 170,000 partners and their families who rely on me and others to preserve and enhance our company, I know that I am responsible for ensuring the success of the company for the long term, which means that difficult decisions must be made. Personally, I continue to struggle with the outcome, because I realize how painful it will be for some partners.

As the result of our review, which was done with great thoughtfulness and respect for everyone concerned, organizational changes have been made. These changes will restructure the company, but they will also result in a decrease of both the number of positions and partners by approximately 600. This total includes the elimination of existing positions and open headcount, as well as the reduction of our current workforce. Within this context, approximately 220 partners have separated from the company. Nearly all were U.S. partners serving in non-retail support roles. We are thankful and proud of the contributions our departing partners have made, and we are committed to treating them with respect and dignity.

Today, we are announcing the following modifications to our organizational structure that are designed to strengthen our focus on the customer in our U.S. field operations, and centralize and/or consolidate many of our support functions to drive functional excellence and reduce redundancies:

U.S. Field Operations

Effective Monday, February 25, the U.S. field organization will begin transitioning from two divisions to four, with full implementation completed by March 24. The new divisions are: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic.

Not only will this organizational structure create more capacity for our field teams, it will enable the company to align our leaders closer to our customers and partners. This will ensure a stronger level of support in partner development, coaching and accountability in the field. Establishing a customer-centric field support structure in the U.S. Business enables our field teams to focus on our partners, customers and our coffee.

Each division will be led by a senior vice president, reporting directly to the U.S. president. Within each division, partners supporting Store Development, Marketing, Partner Resources and Finance will report directly to their respective functions while still being accountable for results at the divisional level. These teams are being centralized to create an infrastructure with global span, capability and effectiveness.

Support Functions

The reorganizations of Starbucks support functions are designed to consolidate functional activities into teams that have a shared vision and goals to support the business.

The following support functions are being reorganized and/or consolidated:

• U.S. Store Development
• U.S. Licensed Stores
• U.S. Finance
• Partner Resources
• Marketing
• In-Store Experience
• Global Supply Chain
• Global Communications
• Partner & Asset Protection

As a result of these organizational changes, some partners may have new roles or new managers.

Partner Care and Support

As I said earlier in this communication, while these decisions were necessary to move our business forward, I fully recognize the personal and professional impacts these actions have on individual partners, and we are committed to making the transitions as smooth as possible.

Once again, I would like to thank all of our dedicated and passionate partners for their numerous contributions to the company.

Onward,

Howard

Starbucks to Expand Technology Relationship with AT&T

SEATTLE–(BUSINESS WIRE)–Starbucks Corporation (NASDAQ:SBUX) today announced a new comprehensive communications agreement with AT&T that will enhance the enterprise networking capabilities for Starbucks by streamlining business operations and enhancing the customer experience. With this announcement, AT&T, which has provided Starbucks with network connectivity for point of sale and other store operating systems for more than 10 years, will offer consumer Wi-Fi service in more than 7,000 Starbucks locations in the U.S. beginning in spring of 2008.

“Now more than ever, Starbucks is focused on the in-store experience for our customers,” said Chris Bruzzo, chief technology officer, Starbucks. “As we continue to build our technology offerings in ways that both enhance and expand the Starbucks Experience for our customers, we made a strategic decision to expand our existing relationship with our longtime technology partner AT&T to include consumer Wi-Fi.”

In recognition of the many T-Mobile customers who enjoy visiting Starbucks, the Company is also announcing that T-Mobile HotSpot customers will be able to continue to access Wi-Fi services at no additional cost, through an agreement between AT&T and T-Mobile.

“As we continue to build upon our digital entertainment platform, our expanded partnership with AT&T will permit us to deliver a compelling in-store entertainment experience for Starbucks customers as well as AT&T’s customers,” said Ken Lombard, president, Starbucks Entertainment.

“We are committed to connecting people to their worlds wherever they live and work,” said Rick Welday, AT&T’s Chief Marketing Officer—Consumer. “For our more than 120 million customers, this is just another way we deliver their world of communications and entertainment – all from the comfort of Starbucks.”

Customer Wi-Fi services from AT&T will be rolled-out to Starbucks locations in the U.S. on a market-by-market basis beginning in the spring of 2008. Starbucks will work with AT&T to create a range of compelling Wi-Fi pricing structures for Starbucks and AT&T customers.

Sam’s Notes

Starbucks is one of my stock picks for 2008. I have written about them before and I will write about them again in the future.

Essentially Starbucks is dumping T-Mobile to go with AT&T for their Wi-Fi Internet offering in stores. Though this does sound good for their bottom line it is bad for their business.

There is a Starbucks in my town that my wife frequents. Often, my daughter goes with her. This store has not been charging for Wi-Fi for a long time. In fact, many business people go there because of the free Wi-Fi. As another point of fact all of the other coffee shops in town that offer Wi-Fi offer it for free. We had one small cafe that had wi-Fi for free and rental desktop machines along one wall but that is the only exception (they also went under).

Having Wi-Fi in your coffee shop is the equivalent of selling cheap DVDs at Walmart. It is a loss leader to get people in the door.

Where this might prove beneficial is in markets where both Starbucks and AT&T have a strong presence. I have AT&T DSL at home and knowing that I can use AT&T Wi-Fi at Starbucks is a nice selling point. With that said, I can also use Joey Joe Joe’s free Wi-Fi at his coffee shop a block away.

Wi-Fi in a coffee shop should be free and it more or less is as you get two hours worth when making a purchase. Well, you also have to type in some sort of code to get it to work so… is it worth the hassle? What of those Starbucks stores that already have free Wi-Fi, what will they do?

THQ Reports Fiscal 2008 Third Quarter Results

AGOURA HILLS, Calif.–(BUSINESS WIRE)–THQ Inc. (NASDAQ:THQI) today announced financial results for the third quarter of fiscal 2008, consistent with the company’s recently announced revised financial guidance. The company also reaffirmed its financial outlook for the fourth quarter of fiscal 2008.

For the third quarter of fiscal 2008, THQ reported net sales of $509.6 million, driven primarily by WWE® SmackDown® vs. Raw® 2008, Cars: Mater-National and MX vs. ATV™ Untamed, each across multiple game systems. For the same period a year ago, THQ reported net sales of $475.7 million.

For the third quarter of fiscal 2008, THQ reported GAAP net income of $15.5 million, or $0.23 per diluted share, which includes $0.01 per diluted share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, the company reported net income of $16.4 million, or $0.24 per diluted share. Both GAAP and non-GAAP net income include a $0.02 per diluted share gain from the receipt of additional proceeds related to the sale of Minick AG in fiscal year 2007. For the same period a year ago, THQ reported GAAP net income of $62.1 million, or $0.91 per diluted share, which includes $0.09 per diluted share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, net income for the prior-year period was $68.1 million, or $1.00 per diluted share. Both GAAP and non-GAAP net income include a $0.03 per diluted share gain from the receipt of proceeds related to the sale of Minick AG in fiscal year 2007. A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.

As previously reported by the company, fiscal 2008 third quarter results include approximately $27 million in non-cash charges related to the company’s decision to cancel certain projects in development and the write-down of the value of certain intellectual properties as part of its product quality initiatives, as well as approximately $20 million in accelerated amortization expense.

For the nine months ended December 31, 2007, THQ reported net sales of $843.4 million, compared with $854.8 million in the corresponding prior-year period. The company reported a GAAP net loss of $806,000, or $0.01 per share, which includes $0.13 per share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, the company reported nine-month net income of $8.1 million, or $0.12 per diluted share. Both GAAP net loss and non-GAAP net income include a $0.02 per share gain from receipt of additional proceeds related to the sale of Minick AG in fiscal year 2007. For the prior-year period, THQ reported GAAP net income of $61.5 million or $0.92 per diluted share, which included stock-based compensation expense of $0.18 per diluted share. On a non-GAAP basis, excluding stock-based compensation expense, net income for the prior-year period was $74.0 million, or $1.10 per diluted share. Both GAAP and non-GAAP net income include a $0.03 per diluted share gain from the receipt of proceeds related to the sale of Minick AG in fiscal year 2007. A reconciliation of non-GAAP to GAAP results is provided in the accompanying financial tables.

“During the holiday quarter, we were pleased with the record performance of WWE SmackDown vs. Raw 2008 and the successful launch of our internally developed game MX vs. ATV Untamed,” said Brian Farrell, THQ president and CEO.

Farrell continued, “We continue to strengthen our product development capabilities to support our long-term strategy of creating new owned intellectual properties. We look forward to launching Frontlines: Fuel of War at the end of this month. In fiscal 2009, we are well positioned for increased sales and profitability with strong owned intellectual properties such as Red Faction and Saints Row and well-known licensed franchises including WWE, UFC, Disney/Pixar and Nickelodeon.”

Recent Developments:

• During the quarter, THQ shipped more than 5 million units of WWE SmackDown vs. Raw 2008, bringing total lifetime WWE franchise net sales to more than $1 billion.
• During the quarter, total lifetime Nickelodeon franchise net sales surpassed $1 billion, driven by Avatar, Nicktoons and SpongeBob SquarePants.
• For the nine months ended December 31, 2007, THQ’s international net sales increased significantly, to 50% of total global net sales from 40% a year ago, as THQ continued to execute on its international growth strategy.
• For the quarter and nine months ended December 31, 2007, THQ grew its Nintendo DS™ revenue 94% year-over-year, aided by the launch of Drawn to Life™, a newly established owned franchise created specifically for the Nintendo DS system.
• On January 18, 2008, the company acquired Big Huge Games, a veteran development studio focused on the multi-billion dollar Role-Playing-Games market.
• On January 23, 2008, THQ announced the appointment of two executives to newly-created product development positions to help drive new intellectual property creation.
• On February 4, 2008, THQ announced the appointment of technology industry veteran Colin Slade as executive vice president and chief financial officer.

Fiscal 2008 Guidance

THQ reaffirmed its recently issued guidance for the fourth quarter and full fiscal year ending March 31, 2008 as follows:

• For the fiscal year ending March 31, 2008, THQ expects net sales of approximately $1.04 billion and a GAAP loss per share of approximately $0.16, which includes approximately $0.21 per diluted share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, the company expects to report net income of approximately $0.05 per diluted share.
• For the fiscal fourth quarter ending March 31, 2008, THQ expects to report net sales of approximately $200 million and a GAAP net loss of approximately $0.13, which includes approximately $0.07 per diluted share of stock-based compensation expense. On a non-GAAP basis, excluding stock-based compensation expense, the company expects to report a net loss of approximately $0.06 per diluted share.

Non-GAAP Financial Measures

In addition to results determined in accordance with GAAP, THQ discloses certain non-GAAP financial measures that exclude stock-based compensation expense and related income tax effects. The non-GAAP financial measures included in the earnings release have been reconciled to the comparable GAAP results and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

When evaluating the performance of its business, THQ does not consider stock-based compensation charges. Likewise, THQ excludes stock-based compensation expense from its short and long-term operating plans. In contrast, THQ’s management team is held accountable for cash-based compensation and such amounts are included in the company’s operating plans. In addition, the stock-based compensation charges are subject to significant fluctuation outside the control of management due to the variables used to estimate the fair value of a share-based payment, such as, THQ’s stock price, interest rates and the volatility of THQ’s stock price. Further, when considering the impact of equity award grants, THQ places a greater emphasis on overall shareholder dilution rather than the accounting charges associated with such grants.

In the financial tables below, THQ has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.

Investor Conference Call

THQ will host a conference call to discuss fiscal third quarter results today at 5:00 p.m. Eastern/2:00 p.m. Pacific. Please dial 877.356.8075 or 706.902.0203, conference ID 31143285 to listen to the call or visit the THQ Inc. Investor Relations Home page at http://investor.thq.com. The online archive of the broadcast will be available approximately two hours after the live call ends. In addition, a telephonic replay of the conference call will be provided approximately two hours after the live call ends through February 7, 2008, by dialing 800.642.1687 or 706.645.9291, conference ID 31143285.

About THQ

THQ Inc. (NASDAQ:THQI) is a leading worldwide developer and publisher of interactive entertainment software. Headquartered in Los Angeles County, California, THQ sells product through its global network of offices located throughout North America, Europe and Asia Pacific. More information about THQ and its products may be found at www.thq.com and www.thqwireless.com. THQ, THQ Wireless, Big Huge Games, Drawn to Life, MX vs. ATV Untamed, Red Faction, Saints Row and their respective logos are trademarks and/or registered trademarks of THQ Inc.

All other trademarks are trademarks or registered trademarks of their respective owners.

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, the company’s expectations for revenue and earnings per share for the quarter and fiscal year ending March 31, 2008, and for the company’s product releases and financial performance in future periods. These forward-looking statements are based on current expectations, estimates and projections about the business of THQ Inc. and its subsidiaries (collectively referred to as “THQ”) and are based upon management’s beliefs and certain assumptions made by management. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive and technological factors affecting the operations, markets, products, services and pricing of THQ. Unless otherwise required by law, THQ disclaims any obligation to update its view on any such risks or uncertainties or to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect THQ’s financial results, described in other documents that THQ files from time to time with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K for the fiscal period ended March 31, 2007, and particularly the discussion of risk factors that may affect results of operations set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

THQ Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
		Three Months Ended							Nine Months Ended
		December 31,							December 31,
		2007			2006				2007				2006
Net sales		$	509,609		$	475,741			$	843,443			$	854,767
Costs and expenses:
Cost of sales – product costs		175,568			162,110				306,732				288,117
Cost of sales – software amortization and royalties		126,270			71,417				177,179				140,364
Cost of sales – license amortization and royalties		50,420			49,759				86,250				86,903
Cost of sales – venture partner expense		19,207			13,503				21,241				14,985
Product development		41,311			21,912				94,504				73,834
Selling and marketing		65,499			51,213				135,495				116,849
General and administrative		15,528			24,100				52,269				59,271
Total costs and expenses		493,803			394,014				873,670				780,323
Income (loss) from continuing operations		15,806			81,727				(30,227		)		74,444
Interest and other income, net		3,412			2,595				13,337				9,071
Income (loss) from continuing operations before income taxes and minority interest		19,218			84,322				(16,890		)		83,515
Income taxes		5,224			24,367				(14,571		)		24,215
Income (loss) from continuing operations before minority interest		13,994			59,955				(2,319		)		59,300
Minority interest		─			(7		)		─				136
Income (loss) from continuing operations		13,994			59,948				(2,319		)		59,436
Gain on sale of discontinued operations, net of tax		1,513			2,107				1,513				2,107
Net income (loss)		$	15,507		$	62,055			$	(806	)		$	61,543
Earnings (loss) per share – basic:
Continuing operations		$	0.21		$	0.92			$	(0.03	)		$	0.92
Discontinued operations		0.02			0.03				0.02				0.03
Earnings (loss) per share – basic		$	0.23		$	0.95			$	(0.01	)		$	0.95
Shares used in per share calculation – basic		66,118			65,387				66,502				64,737
Earnings (loss) per share – diluted:
Continuing operations		$	0.21		$	0.88			$	(0.03	)		$	0.89
Discontinued operations		0.02			0.03				0.02				0.03
Earnings (loss) per share – diluted		$	0.23		$	0.91			$	(0.01	)		$	0.92
Shares used in per share calculation – diluted		67,815			68,101				66,502				67,150

THQ Inc. and Subsidiaries
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss) (a)
(In thousands, except per share data)
				Three Months Ended December 31,								Nine Months Ended December 31,
					2007				2006				2007				2006
Income (loss) from continuing operations				$	13,994			$	59,948			$	(2,319	)		$	59,436
Stock-based compensation expense (b)					4,730				6,779				17,721				15,912
Income tax adjustments (c)					(3,804	)			(724	)			(8,844	)			(3,458	)
Total non-GAAP adjustments					926				6,055				8,877				12,454
Non-GAAP income from continuing operations					14,920				66,003				6,558				71,890
Gain on sale of discontinued operations, net of tax					1,513				2,107				1,513				2,107
Non-GAAP net income				$	16,433			$	68,110			$	8,071			$	73,997
Non-GAAP earnings per share – basic:
Non-GAAP continuing operations				$	0.23			$	1.01			$	0.10			$	1.11
Discontinued operations					0.02				0.03				0.02				0.03
Non-GAAP earnings per share – basic				$	0.25			$	1.04			$	0.12			$	1.14
Shares used in per share calculation – basic					66,118				65,387				66,502				64,737
Non-GAAP earnings per share – diluted:
Non-GAAP continuing operations				$	0.22			$	0.97			$	0.10			$	1.07
Discontinued operations					0.02				0.03				0.02				0.03
Non-GAAP earnings per share – diluted				$	0.24			$	1.00			$	0.12			$	1.10
Shares used in per share calculation – diluted					67,815				68,101				68,560				67,150
Non-GAAP Adjustments (a)
				Three Months Ended December 31,								Nine Months Ended December 31,
					2007				2006				2007				2006
Cost of sales – software amortization and royalties		(b)		$	2,413			$	625			$	5,391			$	788
Product development		(b)			1,262				1,470				3,434				3,587
Selling and marketing		(b)			573				1,125				2,083				2,486
General and administrative		(b)			482				3,534				6,813				8,990
Interest and other income, net		(b)		─					25			─					61
Income tax adjustments		(c)			(3,804	)			(724	)			(8,844	)			(3,458	)
Total non-GAAP adjustments				$	926			$	6,055			$	8,877			$	12,454
Notes:
(a) See explanation above regarding the Company’s practice on
reporting non-GAAP financial measures.
(b) Stock-based compensation expense recorded under SFAS 123(R) in the
three and nine months ended December 31, 2007 and December 31,
2006, and the payroll tax effects of our historical stock
option grant practices investigation in the three and nine months
ended December 31, 2006.
(c) Income tax associated with stock-based compensation expense.

THQ Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(In thousands)
		December 31,			March 31,
		2007			2007
ASSETS
Cash, cash equivalents and short-term investments		$	325,344		$	457,958
Accounts receivable, net of allowances		270,740			67,586
Inventory		43,584			27,381
Licenses		27,346			41,406
Software development		148,822			130,512
Income taxes receivable		5,890			18,525
Prepaid expenses and other current assets		14,954			16,238
Total current assets		836,680			759,606
Property and equipment, net		49,359			45,095
Licenses, net of current portion		61,356			49,661
Software development, net of current portion		26,066			33,766
Income taxes receivable, net of current portion		14,104			2,163
Deferred income taxes		15,812