Tim-
Negotiations with WCW are underway, to extend the license agreement which expires in 1999. My 1998 estimates project that WCW titles will account for between 40 and 45% of THQ's revenues and earnings.
I don't think this makes THQ dead meat for 1999, if WCW goes elsewhere. If Rugrats and Quest 64 are good, 1999 should be fine, as long as THQ continues to produce more great titles. My Q4 estimate figures that Rugrats and Quest 64 will contribute about 40% to THQ's revenues and earnings. That doesn't mean that THQ is very risky. It simply means that THQ's sales and earnings will be dominated by a few excellent titles, until the company gets large enough to have a more diversified portfolio. This should become an issue, either for better or worse, in late 1998. But for now, THQ is sitting pretty and working on making new deals.
If you ask me, I bet that THQ and WCW will reach an agreement in 1998. Perhaps the PC platform is next: WCW Thunder, for PCs, to be released in mid-1999. I have no evidence of this speculation, but I believe it is possible.
Another note: The Street consensus is that THQI will earn $1.56 in 1998 and $1.80 in 1999. A 15% increase for 1998 and 1999? GIMME A BREAK, WALL STREET! As most of you are aware, I doubt these "guesstimates" are anywhere close to what the actual numbers will be. I admit to being somewhat concerned about 1999 quarterly comparisons (although I'm confident in Q1 1999). However, I'm sure that Farrell & Co. will find new titles and games that will provide a meaningful increase in 1999 numbers over those of 1998.
Todd |
