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Technology Stocks : THQ,Inc. (THQI)
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To: Marc Newman who wrote (8908)12/8/1998 3:04:00 AM
From: Marc Newman   of 14266
 
Ahh, truncated that transcript a bit. Sorry.

Here's the rest:

JT: WHAT DO YOU FORECAST FOR GB MARKET SHARE NEXT YEAR?

BF: THQ DOESN'T FORECAST MARKET SHARE; MAY SHIP A WWF TITLE FOR GB;
WILL SHIP MORE RUGRATS AND BUG'S LIFE IN '99 [PRESUMABLY 1Q '99].

KURT ALEXANDER (MEDIA GROUP RESEARCH): WHY DIDN'T YOU USE
RUSHWARE IN PAST AS THQ'S DISTRIBUTOR? SINCE YOU USED STOCK FOR
THIS ACQUISITION, WILL YOU BE MORE INCLINED TO DO AN EQUITY DEAL IN
THE FUTURE?

BF: THQ HAD RELATIONSHIP WITH KONAMI AND OTHERS SO USED THEM. BF
HAS KNOWN JURGEN FOR YEARS. THINKS JURGEN IS GREAT AT FOCUSING
ON GERMAN-SPEAKING TERRITORIES.

STOCK PRICE MAKES THQ COMPETITIVE WITH OTHERS AS CONSOLIDATION
OCCURS. THQ WILL LOOK FOR OPPORTUNITIES THAT ARE STRATEGIC AND
ADD TO THE BUSINESS. IF THEY FIND THEM, THEY'LL DO DEALS. IF NOT, NO
DEALS. VERY SIMPLE.

KA: 1999 G&A?

BF: MAYBE SLIGHT INCREASES IN TOTAL DOLLARS BUT NO INCREASE AS A
PERCENTAGE OF REVENUES. PRODUCT DEVELOPMENT WILL BE SIMILAR TO
WHAT HAS OCCURRED SINCE GAMEFX ACQUISITION. NO MAJOR ADDITIONS TO
PRODUCT DEVELOPMENT DUE TO RW ACQUISITION.

SM: WILL ACQUISITION HAVE IMPACT ON ‘98?

BF: NO. NOT MUCH. 27 DAYS OF REVENUE. NO RESTRUCTURINGS OR
WRITE-OFFS. THIS WILL BE ACCOUNTED FOR AS A PURCHASE. NO ONE TIME
CHARGES. PERHAPS SOME SMALL AMOUNT OF GOODWILL, BUT THIS WILL BE
NEGLIGIBLE; UNDER $1 MILLION.

SH: CAN YOU CHARACTERIZE THQ'S STRATEGIC PRIORITIES? IS ALL STOCK
WITH RW MANAGEMENT LOCKED UP FOR A CERTAIN AMOUNT OF TIME? WILL
THQ FOLD THE RW ACCOUNTING INFO INTO BALANCE SHEET OR BREAK IT
OUT SEPARATELY? HOW DID YOU GET RW FOR SUCH A CHEAP PRICE?
FINALLY, CONSENSUS ESTIMATE IS .65, BUT ARE YOU COMFORTABLE
GUIDING A BIT HIGHER AT THIS POINT?

BF: MAY BREAK OUT ACCOUNTING INFO BUT NOT SURE. SAYS THQ WAS IN
RIGHT PLACE AT RIGHT TIME FOR ACQUISITION. RELATIONSHIP WITH LUCAS
HELPED WITH ACQUISITION. EMPLOYEES AND MANAGEMENT AT RW HELPED
OUT, AND RW SHAREHOLDERS PROBABLY SAW UPSIDE IN THQ STOCK. MGNT
AT RW DIDN'T OWN MUCH STOCK, SO LITTLE LOCK-UP.

RE CURRENT 4Q ESTIMATES: ‘OBVIOUSLY THERE IS CERTAINLY MORE
UPSIDE THAN THERE IS DOWN SIDE WITH RESPECT TO THE FOURTH
QUARTER.' ‘I WOULD CERTAINLY BE MORE OPTIMISTIC THAN THE
NUMBERS THAT ARE OUT THERE CURRENTLY.'

BF: CONCLUDES CC; THQ IS VERY BULLISH RIGHT NOW.
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