Tony, thank you for eloquently and methodically posting the case against MPRS. By the way, your "ill-tempered" flamethrower was understandable given the company's performance from Nov-Feb. I think your argument was well reasoned, but, as you can guess from my prior posts, I disagree with your conclusions. I will say if MPRS does go down the tubes, it will be because you are basically correct at this time. I think there are reasons to believe MPRS is changing directions, AND I am certain that IF I am correct the upside is much greater than the downside because the stock has, to use your term, cratered.
I think the management has owned up to its mistakes, and more importantly, I think they realize what they need to do now to resurrect the stock. I believe the company will be late on Falcon and Ultimate Civ, but not too late, and this is the question whose answer will drive MPRS up or down in the near term. I also believe we can see progress this quarter. Worms 2 and Duels are great products... not potential products... go buy them on the shelves today and see for yourself. MPRS will release 4... I repeat 4... top line products this quarter. The main problem with the company, as you stated, was too few titles. Well, in 1997 they released what, 4 top line titles all year. 4 this quarter. Think about it.
Next quarter they may release two mega hit titles. Falcon is awesome. Civ is still one of the most played games in the world. Right now. It's main flaw is the computer can't compete with a human. Ultimate Civ has the chance to be the great multiplayer Strategy game that will keep addicts up all night the world over. At the very least it should sell 200k to devotees, which is a nice infusion of cash in one of the next two quarters. The remainder of fiscal 99 should see 4 other major titles out, minimum. I have owned the stock since 95, and I've never seen a period of time where I believed they could put this number of titles out. If you believe they will repeat their past performance, you should follow your advice, but I believe the company is focused on getting these titles out., and I believe they will by in large succeed.
I have one question for you to mull over. If the company misses its schedule by an average of 2 months for Fiscal 99 they will put out the number of titles I've outlined. Historically, MPRS has averaged 250K per major title. Average revenue for all the products slated for release in the next year is $25. So, from Jan 1 98 to March 31 99 we are looking at 10 major titles selling a total of 2.5 million copies. That is $62.5 million in revenues, plus all the extras Coy's outlined in his posts. Coy, I might add, has these numbers right far more often than not historically. This comes to 90 million in revenue over these 5 quarters if the company produces high quality titles as in the past and misses its own schedule by an average of 2 months. ( If Falcon sells 500K plus with margins much higher than I've outlined obviously these numbers are low.) Unless the company really stinks, this is the downside. Do you really think the company will have a market cap of 60 million if it meets this sub par performance?
I think MPRS has to perform poorly to be worth only 3 dollars next spring. I think for every 5 million in revenue above my bad case (not, admittedly, worst case scenario) scenario the stock price will be .75 higher than 3... minimum.
The stock price has "cratered" every bit as much as you said in your post after the earnings report. If you really think they are headed for bankruptcy or a firesale, your's is the correct strategy. My point is that if they can survive, they are worth far more than 3.
Snake |
