Here's my updated analysis on Acclaim.ÿ I have mainly concentrated on N64 stuff for this year.ÿ Remember that there are specific PC and PSX games not mentioned here.
Price Movement:ÿ I've said from the get-go that this baby is risky, I reiterate that the holding period for this stock is through the next three earnings announcements.ÿ Quarter ended 5-98 will be announced 7-13-98.ÿ when AKLM was at 7 it had a forward PE of about 40 (forward PE looks at the estimates for the year).ÿ It was a bit over priced; it would have been hard for that price to hold until July or October.ÿ Again, I believe that this stock will hit mid-teens in the next 6-7 months.ÿ You must ignore the short term price movements, our holding period is for 6-7 months.
Positives:ÿ Response to AKLM's big May Lineup has been at least better than expected.ÿ The big hit for AKLM right now is All Star Baseball 99'.ÿ It has been said that AKLM has already sold out of all its initial shipments for ASB 99.ÿÿ Toys R Us reported a reorder of an additional 115,000 units from Acclaim.ÿ Toys R Us reported ASB to be the #2 top selling game the week of its release.ÿ ASB is very important considering that they will be releasing 2 more sports games this year including Quarterback Club 99 (QBC 98 was #1 selling sports game for N64, over 900,000 units sold), and NBA Jam 99 (new this year).ÿ If AKLM can create a good reputation towards their sports games they will become a major player in the video games sports market.ÿ AKLM has succeeded in going head-to-head with Nintendo's Griffey.ÿ AKLM's next opponent is EA's Madden 99.ÿ Remember also that this is the first year for ASB, it's popularity will guarantee revenue in the coming years when ASB '00 and '01 are released.
Response towards Forsaken has been mixed.ÿ It would seem that response towards Forsaken PC has been very good while sales for Forsaken 64 and PSX have been very mixed.ÿ Reviews for Forsaken 64 have been great (see videogames.com, ign64.com, http://http://www.digital-ages.com/index2.html)ÿ player feedback has been either great or horrible.ÿ Remember that this game doesn't have the general appeal of a Goldeneye; rather it is in a very strict game genre.ÿ Sales for Jeremy McGrath for PSX have also done much better than expected; reorders have already been made.
Also remember that our two huge hits for the year WWF Warzone, and Turok II are still in the cards.ÿ AKLM's lineup for the year is beautifully spread out.ÿ Barring the delay rumored for WWF we will see a solid game every month into next year.ÿ Also, South Park could be our Christmas ace in the hole.ÿ There is no doubt that Turok II will carry us through Christmas, but Southpark could give us blowout earnings for the first quarter next year.
Negatives:ÿ Since Quarter ended in May only the initial orders for their May games will be counted towards the quarter to be announced in July.ÿ In reality this isn't really a negative if we're holding because revenue that isn't reported this quarter will only increase our Net Income for Quarter ending August 31.
It has been rumored that WWF Warzone for both the PSX and N64 is going to be delayed until August.ÿ This could hurt sales just a bit for these two highly anticipated games because of the expected release of THQ's barrage of Wrestling games toward the end of the year (WCW/NWO Revenge for N64 (THQ/Asmik)).ÿ Any delays could hurt AKLM's market position in respect to other competitor's games.ÿ Turok II must get released before Late November in order to beat Zelda 64 to the shelves.
Conclusion:ÿ We gotta beat .03 estimates by at least a penny to keep momentum going.ÿ Though it could stay put I believe that keeping our money locked in now is better then missing the big run.ÿ If we do experience a run after July it will be a bonus; October and January is where AKLM is going to shine.
Kenan Halabi
Repo Group
boards.fool.com
N64 Release Dates for 1998
Jul. 29 --- WWF: Warzone (Acclaim/Iguana West)
Aug. 10 --- Iggy's Reckin' Balls (Acclaim/Iguana)
Aug. ?? --- NFL Quarterback Club '99 (Acclaim/Iguana)
TBA QTR. 3ÿ Bust-A-Move 3 (Acclaim/Taito)
Oct. ?? --- Extreme-G 2 (Acclaim/Probe)
Oct. ?? --- Turok II: Seeds of Evil (Acclaim/Iguana)
Nov. ?? --- NBA Jam '99 (Acclaim/Iguana West)
TBA 1998 --- South Park 64 (Acclaim/Iguana)
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