Before everyone gets too warm and fuzzy...
I've held a good-sized stake in MPRS/SBYT for two years now. I've seen it at 10 and at 1 1/2, and haven't sold a share. However, I am now convinced that I should bail at the first opportunity (read: buyout rumor).
I haven't posted since my last ill-tempered flamethrower outburst right after the so-called earnings came out. I have not changed my outlook. Although MPRS might offer great trading volatility in the future for speculators, I don't believe it is a good investment. Here's why:
1) Management is not forthcoming with the truth. They entered into and then broke off a merger agreement with only the lame explanation that "The time is not right". They put out a glowing B.S. press release the morning of announcing a cratering in sales & earnings. They've failed to outline a plan for dealing with NASDAQ and their stock price. Their MO seems to be to announce lots of glowing future potential and ignore or fail to explain present problems.
2) The Great New Strategy is not working. SBYT/MPRS was supposed to enter a new era of profitability by focusing on fewer games of higher quality. For many reasons, some outlined below, the strategy has been a bust.
3) Their tactical implementation raises many questions, not the least of which is why they insist on supporting half a dozen development centers scattered all over the world. For a company their size, it seems a less-than-efficient way of running a railroad.
4) They have been consistently late to market, probably because the techies want to add every Intel doo-hickey they possibly can before shipping. Bad from the tactical perspective, but also makes one wonder: who's running the store? The techies? Or management?
5) Their choice of game themes leaves me scratching my head. Star Trek: Generations? Was that the one with Kirk, or the one with the whales? You know, it's been a few years, guys. And Starship Troopers? I am on record as stating that ST was the worst movie ever, far worse than "Plan 9 From Outer Space", and by the time MPRS comes out with the game (if ever) nobody will remember or care. At the moment, much of the creative momentum seems to be in sequels. Good short-term, but in this business you're only as good as your last gig.
6) The fundamentals of this industry are lame. Products take too much money to make while the buyers are fickle. At least in movies, you can make it up in foreign distribution, television, and video rentals. Here, you can spend $3 mil on a game and crater on the shelves.
7) The gist of this thread has always been "But they have these great games coming out!" That's nice, but sooner or later you have to make money the old-fashioned way: you have to sell something to someone. I am highly dubious of their ability to do so and become profitable.
I have no doubt that MPRS will be bought out. When, that's another question. The fundamentals of this industry require major consolidation, and soon. I am sure that talks are going on, despite what management has said recently (see point #1 above).
I will hold on until a reasonable-sounding rumor starts and the price gets into the 3's. If we should ever be so lucky, expect to see major resistance at 4 as people like me bail out. |
