THE RED CHIP REVIEW, 2/24/98.
TMSR traded at 11 5/8 the day RED CHIP issued their 2/24/98 report. Red Chip's investment conclusion was ATTRACTIVE PRICE with a long-term price target of $16/share...Red Chip indicated that "...while the market is growing between 15% and 20%, TMSR tripled its joystick unit sales from 1996 and grew unit racing wheels by 50%..."...This report also indicated that net income margins actually improved...7.68% for fiscal '97 v. 7.33% for '96...'97 Return on Average Equity 19.86% (v. 15.47% '96) and Return on Average Assets of 14.52%(v. 12.42% '96)...in an effort to expand international sales TMSR has opened an office in Germany and is eyeing Latin America...Red Chip also indicated that management anticipates stiffer competition this year in the racing wheel market and "...to counter this threat, TMSR plans to leverage its brand-name appeal and controller expertise into the console game (i.e. Nintendo and Sony) controller market in 1998..."...with a racing-wheel and gamepad by Spring '98...Red Chip concluded reiterating their 11/97 report that "...TMSR has positioned itself for significant growth in 1998...[and] We remain confident in the strength of the game controller market, in ThrustMaster's brand name appeal, and in management..."...here is where we take issue with this report re: management and especially regarding TMSRs entry into the console market due to competitive threats in the PC market and because of TMSRs brand name appeal [there are other management smoking guns, as we have previously and recently cited]...at present, TMSRs [current] website, by definition, is irreconcilable with branding...and is TMSRs biggest competitive threat to building brand equity...The internet, again, by definition (and re: Yahoo!, ESPN SportsZone, CBS.sportsline, c|net, et al...) takes branding to an exponential level...and arguably significantly, exponentially? more than through international retail channels...in addition, demographics, psychographics, etc. for the console game market, more than the PC market, also significantly raises the bar with 'what's cool'(.)...leading-edge technology concomitant with leading-edge branding, etc. simply matters more than anything, also(.)...TMSRs website, in its current state, simply does not only not cut it but will be TMSRs single biggest competitive threat to TMSRs successful launch into the console game market...TMSRs entry into the console game market is correct, brilliant?...but MUST be contemporaneous with one hell of a website...
source: The Red Chip Review © 1998 Crown Point Publishing, Inc. (503) 241-1265 |
