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Technology Stocks : THQ,Inc. (THQI)
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To: vc21 who wrote (6207)6/20/1998 12:31:00 PM
From: Bleeker  Read Replies (4) of 14266
 
The traditional way to calculate P/E is to give consideration to
market cap. Clearly ERTS should be awarded a higher market cap
than BROD or THQI. Also, some of your entries don't have P/Es
because of negative earnings. But you can calculate P/Es with
companies with negative earnings and if you do they turn out to
be much higher. For example, GE Iteractive has -43 cents earnings
and Acclaim has -2.36 earnings, so there P/Es are sky high.

Perhaps we are being too conservative by using an industry average
P/E of 22, especially if you factor in companies with negative
earnings. The other alternative is to leave them out. Do so and
you end up with a P/E of 22 using your list (33+41+13.5(THQI)+25+
11.5 / 6.) Include the negative earnings companies and it is higher
still. Include market cap and it's higher. My Street numbers are
very conservative.

I think you will see THQ trading closer to a 20 P/E by Q4. THQ's
P/E was there prior to the WCW announcement, so 22 is a compelling
number. As for the Game FX acquisition, I have already talked to
the analyst community about it and I feel comfortable with my EPS
estimate after the charge. But let's leave some room for surprise.
See you on Bastille Day.

Aloha, a heads up on a grim article on Hawaii in the new Economist.
p.29. It is an interesting piece but a little sad. I had no idea that the
state faces a $140 million deficit by June next year.

Bleeker
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