I hope you don't mind if I post some of this stuff...from the article...sometimes I wonder where people get their brains...lots gonna get caught holding the bag on this one....
Investors in Play-By-Play may be expecting a financial miracle by way of Pokemon. Play-By-Play could use one, given its recent performance.
The company lost $4.1 million in the nine months ended April 30, compared with net income of $5.2 million in 1998's comparable period. Sales slipped to $119.8 million in the nine-month period, from $126.5 million a year ago.
Despite the new sprinkling of Pokemon's glitter, Play-By-Play faces other problems. It has defaulted on subordinated debentures with a face value of $15 million. Furthermore, its day-to-day credit line expired in July and was later extended until Oct. 15., and Play-by-Play is trying to replace it or renew it.
With Play-By-Play's stock price and trading volume so high, some analysts believe that investors may not know exactly what they're buying.
For example, Play-By-Play is limited to distributing its Pokemon toys to theme parks, carnivals and arcades - cutting it off from retailers like Wal-Mart. The toys will mainly be used as game prizes. And the earliest the company can start shipping the products is April 2000.
Pokemon is "a hot property" at this time and "some run-up" in Play-By Play's stock is justified, said Jeff Dabbs, an analyst with Kercheville & Co. in San Antonio. Yet, "from looking at the volumes, there's a little bit of speculation going on. . . .and I think a lot of people have a misconceived notion that it [the Pokemon deal] is retail-based."
Mr. Dabbs has not changed his "hold" recommendation on Play-By-Play stock.
Play-By-Play said it was surprised by the Pokemon deal's effect.
"The run-up in the stock exceeded our expectations," said Joe Guerra, the company's chief financial officer. "The response was way beyond what we expected it to be. The trading volumes are staggering."
Mr. Guerra said that he doesn't want investors to misunderstand the licensing deal, adding that Play-By-Play so far can't possibly put a dollar figure on what the Pokemon deal could bring.
"I hope people are looking at the fundamental issues of the company and taking it all under consideration," he said.
Even with its Pokemon-inspired surge, Play-By-Play stock isn't where it was a year ago, when it was selling for about $11 per share. At that time, the toy company was riding high on four years of solid earnings and revenue growth. But Play-By-Play's problems with Latin American operations and retail sales ended that. The company said it is continuing to work out those difficulties.
But given the last two days' events, analysts say, investors seemingly are putting a lot of faith in Poliwhirl and Jigglypuff.
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