THQ,Inc. (THQI) Message Board

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Technology Stocks : THQ,Inc. (THQI)

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To: Kory who wrote (9018)	12/17/1998 3:11:00 PM
From: Quad Sevens	Read Replies (1) of 14266

<< Even assuming they sit on the money and earn 10%, the interest alone would earn $.50 annually from here on. Take the $.50 they could earn without WCW plus the interest earnings and you have $1 per share without really doing much of anything. At today's price, this would yield a PE of 28, not exactly cheap, but not expensive by todays standards. >> No one can earn a risk-free after-tax return of 10% on cash. Maybe 3.5%. At this point in the argument you're making, cash sitting in the bank should be accorded a PE of 1. (How much would you pay for the $20,000 sitting in old stodgy Aunt Mary's bank account?) So .... giving THQ a PE of 30 on non-WCW operating earnings of 50 cents, we get a price of $15.15 for THQ. Of course we believe management can do better than 3.5% by using the cash, and eliminating WCW from THQ's earnings model is silly, but that's a different argument. Best, Wade

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