CONTROVERSIAL:
Richard, nice post but let's take it one step further.
Everyone is saying Farrell did the right thing, Farrell knows what he is doing and this was the right move. But, WAS IT REALLY???
Let me take you the other route with a timeline.
The following will be hypothetical press and earnings releases. Let's see what happens after and then evaluate if walking away from the deal made sense.
It should be known that THQ closed yesterday at 32 7/16, has almost 12 million in cash and 7.4 million shares outstanding.
THIS IS HOW IT WOULD HAVE BEEN:
March 10, 1998- THQ renews leading WCW license to 2002.
The people say OOOO, AHHHH, OHHHHH. The street loves it though.
March 11, 1998- Stock up 4 to 36 1/2.
A couple new press releases and the overall market stays at it's current level
Mid April and stock is now at 38.
April 17, 1998- THQ announces record earnings, secondary.
.50c eps. WCW 75% of Q earnings.
What? Wait a minute. A secondary? What the heck?
April 18, 1998- Stock trades unchanged for the day.
May 27- e3, stock rallies back to 35-36 on good news announced at e3 after going down to 30 in early May.
June 1- THQ completes secondary at $ 32; 1 million shares total sold.
July 17, 1998- THQ blazes to record earnings with Quest.
July 18, 1998- Stock at $ 38.
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So where are we now? We have 8.5 million shares outstanding, 43 million in cash, WCW, (which could be a wash since the license was so expensive) and a $ 38 dollar stock price.
Reality: where we really are. 7.5 million shares outstanding, 12 million in cash, No WCW after 6/99 and a $ 25 dollar stock price.
WAS THIS REALLY A GOOD MOVE ???
Regards,
Vic |
