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Technology Stocks : THQ,Inc. (THQI) -- Ignore unavailable to you. Want to Upgrade?

To: gofrank150 who wrote (11142)	6/28/1999 11:45:00 PM
From: Todd D. Wiener	Read Replies (2) \| Respond to of 14266

Chris- For this quarter, I'm estimating a 40% gross margin for Rushware sales. I'm assuming the Star Wars will be lower in gross margin, perhaps 35%. The publishing revenues for Rushware will be higher than 40%. It is tough, but that's why it's called an estimate. But as Rushware's volume increases in Q3 and Q4, their gross margin should be close to 50%. In Q2, my overall THQI gross profit margin estimate is 55.7%. By Q4 1999, the gross will decline to 54%, due to higher % of sales from cartridge-based platforms and higher international revenues. Royalties for Q2 might be 19.4% and average 19.6% for FY99. Remember that the WWF titles don't affect the royalties line (or any other expense item, for that matter). THQI has enough reserves that they can afford to ship 800K units of RR64 in Q2. Does anyone really think that retailers won't be able to sell that many? THQI will sell twice as many by year's end. To answer Jeff's question, I get 800K by contacting some retailer buyers, but mostly from THQI's history in shipping successful titles near the end of the quarter (and by looking at Rugrats PSX). I agree that THQI doesn't need to ship this many before July 1. But it certainly doesn't need to reserve any of them if they are shipped in Q2. What are estimates for, anyway? If they're for trying to guess what Farrell's going to do, with regard to managing earnings and reserves, then I've missed the point. If estimates are to give an indication that THQI has the ability to ship enough units to have a great quarter, then I'm right on. I don't doubt that THQI might ship only 400K units (or ship 800K and reserve 400K), but my point is that THQI can beat the consensus estimate by at least 40%. It's up to THQI how much they want to post for Q2. But it will be 18 straight quarters, for sure. Todd