Again to summarize:
1) The lawsuit focuses on the period between October 26, 1999 and
February 10, 2000 - Class Action period.
2) If THQI has a good 4Q, then there was nothing wrong with the run up and insider selling (not unusual) etc.. and you wouldn't be able to make a case EXCEPT for what occured later. There is nothing in the news that's misleading. The final stage of the run-up was the addition to the S&P 600 and #1 ranking of WWF. - biz.yahoo.com
3) Then you have profit taking and more shorting combined with the traditional sell-off in late Dec. - Jan.
4) Then the company says.. ''Reports from retail indicate that 1999 marks the biggest holiday selling season ever for THQ,'' said Brian Farrell, president and CEO, THQ. ''We topped the charts with WWF WrestleMania 2000 for N64, Disney/Pixar's Toy Story 2 for Game Boy
Color, our Rugrats releases, and launched our first MTV Sports release, MTV Sports: Snowboarding. We anticipate record sales and earnings for the fourth quarter of 1999, and we continue to believe that we will exceed final analyst expectations for the quarter. We are excited to unveil our 2000 line-up, which includes our first online product, our first Dreamcast release, as well as launch support of the highly anticipated PlayStation 2. This schedule promises another great year for THQ.''
5) Then on Feb 8th the company called analysts and lowered earnings projections for the first half of the year. - THE PROBLEM.
You CANNOT issue a press release stating that last year was a great year and this year should be another one - AND THEN 30 days later lower estimates for the first half of 2000.
THAT IS THE KEY to the whole case. The lawyers are using the highest trading point and lowest trading point to create the largest loss basis - naturally. They ARE greedy but so is the company and everyone else.
THQI didn't do anything wrong during the run-up in 1999. It was mostly related to WWF, being added to the S&P 600 and it was the best Q of the year.
If THQI DID NOT release that "hyped" press release and then lower estimates we probably wouldn't have seen a lawsuit because THQI never would have mislead investors. That's why they will lose.
I don't care about anyone that lost money in late 1999. It was not surprising to see the stock come back down. What was wrong was the misleading information from the company and quick adjustments.
For that reason, good for THQI, now they need to fix the problem. It won't cost THQI that much cash out of pocket and it won't affect the long-term investors much either. Their insurance provider will cover most of the cost so who cares. Of course, their insurance provider may file a claim against THQI.
Summary:
You make misleading statements - you pay! If they weren't sued, what's to keep them and others from doing it all the time.
Message 12824203
It's not a big deal. I'm sticking to my game plan of accumulating on dips. |
