I hope that people on this board don't mind an off-subject post, but I thought that there might be some interest here in another gaming stock, THQ (THQI). The company, which makes and distributes games for all the major platforms, has been going like gangbusters lately.
Moreover, as everyone probably knows, there's a major gaming exhibition (E3) coming up June 19, 20, 21. Last year, THQ (the stock) did very well both in anticipation of the show and following it.
Below, I've copied one of my posts from the THQI SI board,
which explains the THQ story in some detail. [post follows]
The Street carried a piece today by Cramer suggesting that it's
sponsorhip that moves small caps. He went on to say that doing a
secondary is a good way to get sponsorship. I thought that readers on
this board might be interested in an e-mail that I sent The Street in
response to Cramer's article.
Subj: Re:Stocks without Sponsorship
Date: 97-05-10 12:41:54 EDT
From: Wolfdog2
To: letters@thestreet.com
Read with interest Cramer's piece on what moves small stocks.
Thought you and your readers might be interested learning about THQ
(THQI), a small company that hasn't been picked up (yet) by Wall
Street's Radar, even though the company did a secondary earlier this
year.
THQ makes and distributes video games for all the major platforms
including Sony Playstation, Nintendo 64, Sega Saturn, as well as games for the PC. In April the company reported Q1 earnings of .12 blowing
away analysts' estimates of .07 (Q1 1996, the company reported a loss of.06) At the end of March the company released WCW versus the World for the Sony Playstation. WCW quickly climbed to the top of the charts
as one of, if not the, bestselling video game in the country. Not only that a second minor hit game , K-1 Arena Fighters, was released in April. Pax Imperia, a game for the PC, which has been widely awaited, is due to be released this summer.
To top it off, WCW for N64 is scheduled for release before Christmas
1997. So you would think that the stock would be soaring. Guess again.
The stock has been languishing. So much for the good news. What's wrong with thestock? Well, contrary to expectations, the secondary killed the stock. Prior to the secondary, the stock got as high as 10 3/4. Then the secondary was annnounced. The stock started to swoon and never recovered. The secondary was done at 7.5 by Wedbush and Morgan back in February and the stock has pretty much been capped under 8 ever since. [end letter and post]
I was in fact contacted by The Street in response to my letter and told by the reporter who wrote to me that he had been on the last conference call with THQ and was thinking of writing up the stock. He was to have contacted me that week, but didn't.
Btw on the last conference call there was one, if not two, analysts who participated but have not as yet written up the stock. In addition the stock has come alive recently, moving up on expanding volume. There were also a number of insider purchases at around 6 1/2--the stock is now 8 3/8. The stock sells at 14 times expected earnings of .60, which I think is low. In fact, I think, but can't confirm, that the one analyst who covers the stock recently raised his estimate for 1997 to .66. Even if they do only .60, however, that will still be an increase of 50% over last year.
As I already mentioned there is a SI board for THQ. The MF board on AOL is far more active, however. (PLease note, however, that the people on the MF board have recently moved the board over to the Company Research Boards on AOL.)
Disclaimer: I have a large position in THQ.
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