Spoke to Joe Garrity, KIDE's CFO, yesterday and the conversation increased my confidence that KIDE will come through with great 4th quarter earnings and have a super year in 1999. For Q4 1998, although Garrity wouldn't be specific, my impression was that sales of the Pokemon home video, Golden Eye video game and WCW merchandise surpassed expectations and KIDE's 1998 EPS should exceed $.70 by a substantial margin. Garrity implied there might be an update on the 1998 EPS forecast before they officially report in early March.
1999 will be the Pokemon/Zelda year. Garrity told me the Pokemon TV show continues to get exceptional ratings and it's expected this will translate into continued growth in merchandise sales (as was the case in Japan). In February, 1999, Hasbro is scheduled to introduce another line of products and KIDE is working on releasing a Pokemon movie later in the year. Also, release of the USA N64 version of Pokemon is planned for the summer of 1999. So, Pokemon merchandise should sell well throughout 1999 and, with a full line of Pokemon products available for the 1999 holiday season, Pokemon revenues should really boom.
As for Zelda, KIDE already did a deal with one company (Bensussen Deutsch & Associates in Redmond, WA) which recently began selling some merchandise. And Garrity said they're busy working on other Zelda merchandise license deals. Both Garrity and a Bensussen Deutsch representative I spoke to were amazed at the incredible popularity of Zelda. And, although video games don't usually produce huge merchandise spin-off sales, Zelda could be different.
Also, KIDE will benefit from the new WCW video game to be released in 1999 by Electronic Arts.
My guess is, over the next couple of months, KIDE's stock price will get a lift from Hasbro's new Pokemon product introduction, announcements of new Pokemon and Zelda license deals, an increase in the 1998 EPS forecast, a terrific 1998 earnings report and a forecast by CEO Al Kahn for KIDE's 1999 earnings to at least double 1998's EPS. |
