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Technology Stocks : Activision....Returns!

ATVI 94.42

0.0%

Oct 13 5:00 PM EST

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To: Burlitis who wrote (1355)	1/17/1999 5:38:00 PM
From: Daniel Ralls	Read Replies (1) of 1992

Hi everyone, I listened to an interview w/ Kotick on Bloomberg last week. It was a good interview, lasted over 12 minutes...here are the highlights: -55% increase in on-line sales. Having a special promotion for 300,000 of their best customers...should see "interesting results" in on-line sales over next 10 days. -Civ:CTP -interviewer asked how many units they expect to sell. Kotick says we don't give out unit estimates but remember Civ II sold over 2MM units. -don't rely on breakout hits to achieve financial results. (to me this implies that if they have a 1-2MM unit seller they will beat EPS estimates for FY00- Civ:CTP is the only game I can think of as having a chance to be a monster hit) -talked about low end games and how they are a different market/contain different demographics than the premium game market. It's important for ATVI to be involved, discussed some of the new low end games: snowboarding, inline skating, and RODEO!! -strive for balance w/ regards to sales of PC/console games. Will try and maintain 50-50 split. -Listed 5 primary objectives for ATVI(although he only mentioned 4!) 30% rev growth double digit operating margins (10%) 35% EPS growth generate 20-25% net return on capital Believe it could take 12-24 months to achieve all objectives but mentioned that the 35% EPS growth has been achieved and believe they should maintain that growth. -Dreamcast - will support it but he didn't sound to enthusiastic about it. Mentioned that Playstation/Nintendo are kings but if Dreamcast takes off ATVI will support it more aggressively. -Apple Macintosh - views were similar to Dreamcast..really need to have multi-million unit installed base before ATVI will get really excited. -Stock value - very undervalued..if they didn't do acquistions last year they would use the authorized stock buyback and be buying back shares at these prices. (They have $50MM in cash now, and their A/R will be converted to cash, say $30-$50MM this qtr. With $80-100MM in cash, what is to prevent them from buying back shares in 3 mos time?) ----- that was pretty much the interview. I originally bought this stock for a Christmas run to $17-18 which never happened. Instead of dumping it I will hold on for the long term. It seems to me that all the intergration issues w/ last years acquistions are complete and they have instituted cost saving programs to make the company run better. I think they can start producing consistent EPS #'s and generate alot of cash (for buybacks or acquistions). If this does happen the stock could easily trade in the mid 20's by September.

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