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Technology Stocks : Electronics Boutique (ELBO)
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To: ratherbelong who wrote (543)9/15/1999 9:31:00 PM
From: Top Jim  Read Replies (1) of 779
 
RBL,
Thanks for the reply. I've been hearing 1M Dreamcast build schedule for '99. Did you state that the build sched will allow for 1.5M before 12/31 or is it 500K avail between 1/1/00 and 9/8/00? Am figuring ELBO will get 1/3 of allocations.

Thought I'd chime in with an earnings estimate of my own:
Based on 80K units allocated to ELBO this year plus avg. of 1.5 games per system Dreamcast should account for $40M in revenue in '99. I'm estimating 40 cents on the dollar would have been spent by gamers at ELBO anyway so only 60% of the $40M is incremental revenue/profit. ELBO gross margins are 26-27% but this includes mgmt fees and probably a higher revenue mix for games vs. consoles vs. Dreamcast. So I'm estimating 22% for Dreamcast margins. Therefore, incremental EPS from Dreamcast in '99 should be $0.26 minimum. Not sure how much baked into estimates of $0.10 for this Q and $0.97 for next, but I think we'll see an extra .03-.05 this quarter surprise plus another dime in Q4. EPS then of $0.14 and $1.07 for the next 2 Q's. If we get a couple killer games for N64 and Playstation it could be even better.

With better earnings and growth rates we should see the spread grow again. Expect earnings revisions, more analyst coverage, more great press and announcements to help close the gap. Relative to ratios in S&P we should carry a P/E of 30 or better. Net: while this stock has come a long ways in the last 6 weeks it still has plenty of room to move higher.

Best regards,
TJ
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