eidos--maker of Tomb Raider Message Board

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Technology Stocks : eidos--maker of Tomb Raider

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To: Marc Newman who wrote (1307)	8/31/1998 5:57:00 PM
From: Bleeker	Read Replies (1) of 1773

I don't think earnings will necessarily be better than the First Call estimate. What I do know is that EIDOS has shed 63% of its value on no real material news. So EIDOS has hardly escaped the broader selloff. I would be surprised if EIDOS beat the First Call estimate calling for a loss (-33 cents) by a big margin. That would be excellent but too much to ask for. I look at the analysts' estimates as cautious more than pessimistic. Certainly, Goldman's estimate calling for a loss of (-51) cents is pessimistic. Looking beyond Q1, forward earnings look the strongest compared to other companies in the sector, especially in the Christmas season. Last year, for example, EIDOS earned $1.62 Oct-Dec. thanks to Tomb Raider II. The problem is that few are focused on P/E ratios and earnings now, both of which are better this year than the prior 12 month period in the case of EIDOS. The difference this year is that EIDOS has positive 12-month trailing earnings unlike last year; a stronger game line up & a bigger installed base of video game platforms and PCs to target. Another difference is its P/E. Using UK GAAP $1.09 it's in the 8 range currently and ready to drop further thanks to losses last year making EPS comparisons easier this year. Meanwhile, the Russell has outperformed EIDOS by about 112%. The Russell index is only down 29% from its peak so far this year. So EIDOS has experienced a correction that is much more excessive: more than twice as harsher as the index average. Like I said, if you strip away cash reserves per share, it's trading at around $5. Unlike many other companies in the sector it has had zero insider sales this year at its peak or during its recent slide. Go figure. Bleeker

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