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

To: gofrank150 who wrote (13357)	2/13/2000 12:37:00 AM
From: Sigmund	Read Replies (1) \| Respond to of 14266

I thought it would be fun to translate these two earnings forecast into after tax marginal returns on sales i.e. the slope of a straight line fiting these two estimates. Fourth Quarter FirstQuarter person earnings revs earnings revs gofrank150 .80 130 .29 66.6 Mr. Aloha .71 155 .34 74 Starting with gofrank150 slope = (.80-.29)/(130-66.6) = .51/63.4 = 0.8 cents per million in incremental revenues. cents being cents per share of course. Next Mr. Aloha himself slope = (.71-.34)/(155-74) = .37/81 = 0.4 cents per million in incremental revenue. Conclusion is there is a big difference in either the gm or tax rate between these two estimators. I didn't work it out but there is also a big difference in the estimates of fixed costs by these two estimators. Based on 18.5 million shares the two slopes translate into 0.8 (18.5MM)= $148,000 per million of revenues = 14.8% incremental after tax margin 0.4 (18.5MM)= $74,000 per million of revenues = 7.4% incremental after tax margin. Both of these marginal rates seem too low to me. Did I screw up the calculations? If I made the calculations correctly, the conclusion would be that either estimates for 4Q results are too low or estimates for Q1 2000 are too high. I realize one error for sure. I need to back out the 4Q 1999 AKLM earnings as they are one time and not related to THQI sales. But I don't know how to do this as I don't know what each estimator used.