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

To: JEFFREY S. FENDER who wrote (13697)	3/28/2000 10:46:00 PM
From: Kory	Read Replies (1) \| Respond to of 14266

10-K is out today. Has some interesting news in new titles, as well as some restatements from the initial press release. It shows that Shao Lin has been released in 4th quarter 1999 on PSX. This title must have been very weak not to even release it in the US. Two very curious items buried deep in the 10-K: 1) "In February 1999, in settlement of litigation, we issued warrants expiring March 19, 2000 to Millennium Partners to purchase 150,000 shares of common stock at $16.08 per share. The fair value of the warrants at issuance was $564,000." What the heck is this? The only thing I can figure out is that it was for pulling the seconday offering that they were considering, or a possible cancellation lawsuit for walking away from the Micropose deal. 2) "In December 1998, we acquired all of the outstanding shares of Rushware Microhandelsgesellschaft mbH and its subsidiaries, Softgold Computerspiele GmbH and ABC Spielspass GmbH ("Rushware") for consideration consisting of approximately $1,582,000 in cash and 249,930 shares of common stock with a fair value of $4,432,000 which was accounted for as a purchase. In 1999 we renegotiated the purchase of Rushware and received a payment of $2,540,000 from the sellers. Rushware, based in Germany, is a leading German distributor of interactive entertainment software for personal computers. Rushware now serves as our distributor and publisher in Germany and other German-speaking countries." How the heck was THQ able to renogiate a deal that supposedly was so profitable for THQ? $2.5 million is a lot of money given we only paid $6 million is stock and cash to begin with. All in all, THQ's 1999 year seems to have been less profitable from a cash and clean sell-through perspective than 1998 was. There doesn't appear to be any doubt that THQ got less conservative in 1999. Overall, it is reasonable since they were ultra-conservative in previous years. But is does raise big questions about THQ's ability to profit from much other than wrestling. I also don't like all the hidden facts that THQ appears to keep. I think it leads to the lack of trust in management. I think they would do themselves a big favor if they came clean with what was happening to there titles and costs, rather than continually trying to keep them piled together to avoid any reasonable analysis. Will be interesting to see the first quarter 2000 report for sure. Kory