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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Michael Berkel who wrote (8535)12/17/1997 7:46:00 PM
From: Franco Battista  Read Replies (1) of 9285
 
Michael, appearances can be deceiving. I checked out on Brod- here are some key points amongst others:
1) CD-Rom market has had decreasing sales lately and industry analysts see the slide continue
2) Brod's royalties on Riven will be less than Myst- they will receive about $8./ game sold
3) Brod's other products (Print Shop, Family Tree etc. ) on a steady decline
4) They are burning cash since they themselves admitted that the price of developing new software is increasing while the price they sell at is decreasing because of less demand and competition.
5) Heavy insider selling in october and november
6) this quarter and the next are the better ones, the next two stink historically
7) you cannot base a valuation on a company the size of Brod(almost 1200 employees) on such few products.
Even if Riven sold as many copies as Myst (4 million-best selling title of all time) that would be $32 million over maybe 6-7 quarters.
Today the company came in at .49/share (.48 expected). Next quarter might be better since the bulk of Riven sales and Christmas sales will be accounted for. Then who knows. This afternoon many were already selling before earnings. I think this will continue. I don't see much of a future for this company unless they seriously re-organize.
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