You guys don't get it!
Please read the following:
1)Regardless of what the P/E is now, that is based on the past. This company has a big psychological overhang right now. Fact 1: THQI will take a 40% hit in earnings a year from now, regardless if their earnings increase over the next year. Why invest in a ticking time-bomb?
2) Yes it's true that we may eventually get to a price where THQI looks like a deal from a value point of view, but there is so MUCH uncertainty here. If THQI can prove that it has something else other than WCW that can be considered a consistent moneymaker, then value comes into play. But I will have to doubt that they will be able to do this unless they start investing heavily in R&D. Why doesn't anyone address this?
I was wrong about my previous figure that I quoted for product development. I quoted $1.6 million in the quarter. I was wrong. It was $1.6 million for the ENTIRE YEAR!!!!
It takes a couple of years and a lot of money (2-3 million on average) just to produce a game, be it mediocre or otherwise. I don't think THQI has been prepared for this at all, a failure in management from my point of view. And once they start investing into R&D, then their nice margins will go "POOF"!
3) Road Rash and Nuclear Strike will be the LAST titles that THQI ever gets from ERTS. Figure that into your decrease in earnings.
Don't forget to figure another title in there as well...Madden NFL 98 for SNES. THQI won't get that again either.
The damage has been done and the ERTS/THQI honeymoon is OVER!
You could be seeing a 50%+ decrease in earnings on top of increased
competition in N64 with ERTS coming in, on top of lost ERTS ports, on top of a likely series of bombs before THQI gets in a groove.
PLUS, all of you are counting on WCW being a hit this year as well!
Nitro was bad. WWF wrestling is out. WCW SALES FOR THIS YEAR ARE NOT A GUARANTEED THING!!!! Who knows? Maybe wrestling has already run its course, just like Street Fighter and Mortal combat did after the first 3 releases!!!
Tom C. |
