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Technology Stocks : Electronics Boutique (ELBO)
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To: Mad2 who wrote (675)4/4/2000 10:58:00 AM
From: ratherbelong  Read Replies (3) of 779
 
Mad2,
Thanks for your comments. From my perspective, this is a company that makes lots of money in the video game business (ELBO), buying a company that makes lots of money in the same video game business. Although, it is true that FNCO's earnings came under some pressure in the last quarter, I believe that ELBO has correctly identified the reason for FNCO's backslide as an infrastructure (inventory management/distribution) problem. Of course, this is one of ELBO' strengths and I'm sure the boys at EB can't wait to apply their proven methods of doing business to FNCO's model. As far as the $17.50 purchase price is concerned...it seems to me that only six months or so ago, anyone wanting to purchase FNCO shares would have paid over $24.00 a share. I agree that ELBO will need to sort out the money making stores from the marginal stores and make some hard decisions...but I trust ELBO to put in the long hours to make this acquisition a tremendous success. As far as the financing of the transaction is concerned, ELBO had $88M in cash sitting in the bank (part from the SPO, part from operations) they also have an untapped credit facility with Fleet for $50M. My guess is they will use the profit they make from FNCO over the next four years to pay for the acquisition. Good luck,
RBL
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