Upcoming GRIN earnings, Furby and all that.
As chief GRIN analyst on the thread, it's down to
me to attempt some 'mid-course correction' to my
earnings estimates on post#96, based on recently
issued information from the company. Keeping it
simple as before, I will divide the estimate into
Furby and non-Furby business.
Non-Furby business - the company has told of
'strong' and 'great' sales in some of these lines,
but this was tempered with comments that other toy
companies had reported a difficult Christmas
season... Not much to go on but makes me want to
stick with my original, fairly conservative estimate
of 28c for this side of their business.
Furby - Last October, GRIN had an expectation of
receiving 200000 Furbys for the Christmas season.
If you take the ratio of the Canadian to the US
population (about 11%) then this number is about
11% of the number of Furbys that Hasbro had available
for Christmas (variously put at 1.5 to 2 million)
and at first sight, this seems like a reasonable
expectation. Now Hasbro is coming across to me as
a pretty decent and sensible company. They are
honoring the prior agreements made by their acquisitions
(Tiger and Galoob) and have quickly settled with
Warner Brothers over the copyright infringement
question (Furby looks like a 'Gremlin'), resulting
in a payment of $1M and no other apparent consequences
(see later). So why would Hasbro risk further
legal problems with GRIN by holding-off on their
'reasonable' entitlement ?... Here's my theory.
Hasbro is selling Furby 'worldwide' and
not just in US/Canada. It's reasonable to assume
that they would sell this first version primarily
in English-speaking countries (it only speaks
'furbish' and English), meaning UK and Ireland,
Australia and New Zealand, plus some limited
allowance for the other 5 billion or so, people in
the rest of the world. Adding these in, Canada's
entitlement from this first pre-Christmas supply
would drop substantially and Hasbro could still be
considered as 'playing fair'.
OK, you say, nice theory but how many did
they get? Don't know. Remember those Canadian
newspaper articles earlier in the thread about The
Bay and Walmart- was that 1000 Furbys per Canadian
Walmart or just one Walmart ? Were all their other
customers, like Sears and ToysRUs getting similar
amounts ? Roughly speaking, GRIN will get about 1c
eps for every 15000 Furbys they distribute.
Twist my arm then and I'd say around 30c would
be my new target for the total 4th quarter earnings.
Of course, this 'extra' unsatisfied demand
in the 4th quarter will now have to be satisfied in
1999, so some corresponding increase should be made
to the '99 numbers. This will probably spread itself
out fairly evenly through the year and will depend on
individual circumstances such as special occasions,
birthdays, advertising, promotions (Macdonalds ?)
and, most of all, easier availability at $30 in the
stores, without the lines and fist-fights.
Furby publicity seems to be continuing
unabated. Some indirect commentary on the Hasbro
settlement with Warner Brothers at this Furby site -
game.com
Looks like Hasbro got 'off-the-hook' quite lightly,
and thank goodness for that. Any hang-up in court
could have caused long delays in future production
and/or a substantial redesign and would have been a
major headache for all concerned - retailers, distributors
and manufacturer.
FWIW,
Frank |
