After looking at the 20-F in some detail, it appears to me that Radica's terrific increase in sales and earnings is almost entirely due to the success of Bass Fishin'. Their "Sports" category increased from $8 million in FY96 to $44 million in FY97, accounting for most of the sales increase for Radica, and I suspect much of the increase in profit as well. I doubt whether the growth in Fishing games can continue to increase 400+% per year. How much sales growth is reasonable in the Fishing category? Should we expect 50%, 100% or more?
I am skeptical that the new games will be nearly as successful as the Fishing line, for several reasons. Bass Fishin' was a huge success because it lets people do what they actually like to do, which is fish. NASCAR fans, however, do not actually race cars, they just sit around and drink beer and watch others race cars, so I see less appeal to most NASCAR fans (unless you can add a device that simulates the opening of a beer can!).
Don't get me wrong, I think RADAF will do very well this year, and the new games will help. I've owned the stock since it was $6 or so, and have been buying more on the dips. However, I suspect the continued key driver for sales and earnings will be the Fishing line. So my question is, if Fishing games accounted for sales of $40 million or so in FY97 (almost 50% of sales), what is a reasonable expectation of Fishing sales in FY98? Based on the store reports, sounds like we should easily exceed $40 million next year, but can Radica sell $100 million of Fishing games?
Dennis |
