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Technology Stocks : THQ,Inc. (THQI)
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To: MikeD who wrote (12868)1/28/2000 1:08:00 PM
From: Zirdu  Read Replies (3) of 14266
 
Why is it necessarily bad if reserves are falling and capitalized development costs are rising? Isn't it true that if the reserve number used by THQ accurately, properly and fairly estimates actual sell through, then a falling reserve would mean that the games out there are selling through better quarter over quarter? So isn't the idea that "falling reserves = trouble ahead for THQ", dependent on THQ management cooking the books, and improperly using reserves?

Second, why is it bad if "capitalized development costs are rising?" Wouldn't that be a sign that the company is developing more titles? Wouldn't you expect a growing company to be developing more and more titles, and so (assuming they capitalize software development costs)incurring more and more "capitalized development costs?"

I don't understand the basic accusation Greenberg and the shorts makes against THQ here. Someone help me out.
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