The Learning Company (TLC) Message Board

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Technology Stocks : The Learning Company (TLC)

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To: zyx1996 who wrote (5995)	11/4/1998 6:07:00 PM
From: Obewon	Read Replies (1) of 6318

Conference Call Q&A'a Didn't get to hear much of the initial call but was in time for the questions: 1) BT Alex Brown: Talk about your acquisition strategy going fwd, what kind of targets are you looking for in the future? TLC: Company becoming increasingly picky, Any acquisition must: a) materially increase the company's leadership position in one of its three target markets (education, productivity, or reference) b) must be immediately accretive (they discussed the prior three years of goodwill writedown and the pain shareholders went through) They did say they may buy specific products or very small companies (the Cosmopolitan line was used as example). They stressed that investors should look to internal growth for the most part going forward. 2) Warburg Dillion Reed: Talk about Broderbund merger and its product strategy going forward. TLC: Looking at just weekly PC Data figures the market share of Broderbund has increase from 4.4% to 9.0% in just the past five weeks (admittedly helped by the Rugrats title release) The company overstocked Myst/Riven by 20% in anticipation for 4Q but orders have already blown through projections and they are currently backordered. Looking forward the company plans a 32 bit version of Myst next year but as yet no follow-on to Riven. The Printcraft/Printmaster line of products will be heavily extended with price points ranging from $9.99 - $95. Most new products will contain Web-based links and features to be able to add onto the titles. Extending the Aurthur line, KidPics and Rugrats Very little mentioned on Mindscape division beyond Myst. 3) Wasserstein Parella: Retailer relations issues TLC: Immediately after Broderbund merger started getting together with it major partners to map product strategy. Planning is for at least three quarters out. Much more planning is occuring in the industry - sign of industy growing up. Have completed product planning with 3 of top 5 retailers NO intention of folding Broderbund or any of the other major bands and rebranding their titles. 4) Piper Jaffrey: Is WalMart 100% direct? TLC: First answered yes then corrected and said that last non-direct shipment would occur next week. Walmart only 3-4% of TLC revenues Direct program increases margins slightly but probably won't have material effect since Walmart % of revenue is small. 5) Piper Jaffrey: What are the new titles coming out and where does company see the biggest opportunity? TLC: Company generally doesn't release as much in 4Q due to buyer patterns for most titles but several American greeting titles, a Mavis Beacon typing title, 3D Home Design, several Family Geneology databases, and a couple of entertainment titles (Blackstone Chronicles and a couple others). The biggest opportunity the company sees is ONLINE. Nearly all new products will allow users to pull additional content from off the Internet into their products. The TLC series of Websites have nearly 2.1 million users. The company will be adding more weblinked products and integrate its sites into a family community supersite (Author note: Not too clear where they are going here) 6) Wasserstein Parella: What were the retail breakout numbers and average number of titles and units carried by each segment? TLC: Too detailed to address during the call. Please call us afterwards and we'll give you the numbers. 7) Robertson Stevens: Discuss your Rebates program and redemption rates. TLC: Redemption rates remain in the mid 20% range though summer saw a slight dip. Coupons becoming less effective so company looking for new ways to promote sales. Recent trial has a buy one, get one free offer which created a 7 fold increase in sales for the early education product being tested. Rugrats promotion and movie tie in will heavily promote Broderbund titles and retailers are adjusting instore presentations to maximize the sales increase. Author: Q&A period was about 25 minutes and the company dis mention that Internet direct sales increased over 100% from a small base. OB

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