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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (17766)	2/12/2000 11:16:00 PM
From: Percival 917	Read Replies (2) of 54805

Hi Mike, I am way behind in reading the posts. I am up here in Chattanooga visiting a quite ill father. I had a few minutes to catch up a bit and I have a question concerning: /I'm not sure how investors should take into account the $18 million in past fees from GIC accounted for in this one quarter. To take the most conservative slant, after applying a 27% income tax rate to that revenue, we would back out net income in the amount of $13,140,000 as a one-time gain. That would reduce net income to $18,838,000 for Q3, or $.08 diluted EPS. The bad news about that view is that it means virtually no change in net income and less than a 6% increase in revenue from the year-earlier quarter. All categories of expenses would then be viewed as growing faster than revenues, resulting in a net profit margin decreasing from 45% to 43% for the comparable quarter. This is NOT good! Frankly, I don't understand why the stock was trading higher in after-hour orders seeing those numbers. I expect the stock to go down significantly once the impact of netting out the GIC fees becomes evident. It appears you were correct for the immediate next day as GMST dropped 3+, but then it quickly reversed and up 8+ the next day. My question is, can the market have fully digested the earnings report? I also expected the drop but not the rapid rebound, at least not until all the details come out and the TV Guide deal is done. As always look forward to your opinion. Joel

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