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Technology Stocks : THQ,Inc. (THQI)
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To: Kory who wrote (9290)1/13/1999 12:40:00 AM
From: Marc Newman  Read Replies (2) of 14266
 
Kory, there certainly is a big difference between your case one and case two. It looks like there were some more issues in this Microsoft case than just over-reserving.

Kelloggs is kind of the poster child for taking an annual "one-time" restructuring charge.

I think THQ is crossing the line into being too conservative. This isn't a turnaround story anymore. As a shareholder, I'd rather have the earnings less smooth and more "true." Because, like OGM, I think I know enough about the upcoming releases that I know what I'm getting into. I would really like THQ to get a hell of a pop if the true sales came out.

I have little accounting knowledge besides what I pick up month to month from these threads, but it seems to me that with THQ's conservative initial shipments and the huge sell-through of the hits this Christmas the reserve is way too high.

Kory, what's your opinion about THQ's options if a ton of the reserves are technically for WCW titles that will be sold-through by June 30? Is it a choice of letting some of that money start to flow down or will we see one hell of a June quarter? Or can THQ legally just flow money down for quarters to come, even though there are no WCW games being sold? If THQ is using money that was reserved for WCW to add to eps in Q3, would it have to note this in the quarterly report? Or does THQ only have to report WCW revenues and thus could legally claim zero WCW revs after June 30? Have I confused you yet?

Also, doesn't THQ have $2 million of remaining NOL that is expiring and has to be used this quarter?

Marc
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