Preliminary Internet Assessment
Generic Software
May 16, 2000
The following preliminary internet activity analysis is a cursory review of relevant online communications related to your company.
Profile Confirmation:
NetCurrents completed a preliminary survey of five (5) Internet sites to confirm that Generic Software's financial profile information was accurate, up-to-date and complete. Following are the findings:
Inconsistent industry label.
Quarterly earnings per share estimates were inconsistent.
Analysts' consensus recommendations did not match.
The release date of next quarter's earnings differed.
CFO information is not updated.
The company's fax number varies.
Recommendation:
NetCurrents should work with data providers to correct this misinformation.
Competition:
Perceived competition by the online community included Interplay Entertainment, Acclaim Entertainment, Midway Games, Inc., Electronic Arts, and THQ Inc. Communications indicated positive sentiment with respect to Generic Software while stating negative comments about competitors. Supporters of Generic Software were far more negative towards Acclaim, who missed their earnings estimates without warning the investment community. The signing of Kelly Slater and Shaun Palmer, in addition to Tony Hawk was positively received. With respect to Acclaim, the online community claimed the company would lose between $40 and $50 million this quarter.
Removal of Messages:
During the one week period covered, NetCurrents' Internet Strategist would have recommended that the following messages be removed:
Message 1: Yahoo! Message Boards
"I work in the finance department of Generic Software and I know that we just signed a strategic alliance with Playstation, this will significantly impact next quarter's earnings!"
NetCurrents would attempt to have this message removed because it potentially violates the Yahoo! Message Board's terms of service.
Response To Messages:
During the one week period covered, NetCurrents' Internet Strategist would have recommended a response to the following (3) messages:
Message 1: Yahoo! Message Boards
"Generic Software to buy back up to 10M shares and conv notes."
"Damn, I'm long on these guys (and currently even) so I hope 10m shares isn't the same as $10m!!!"
Following is an example of a NetCurrents response:
"The Generic Software Board of Directors approved the buy back of $10 million its common stock as well as its convertible subordinated notes. Following is a link to the Reuters article, which confirms the information. biz.yahoo.com;
Message 2: Yahoo! Message Boards
"Generic Software's $0.04 earnings included a $66M restructuring charge!"
Following is an example of a NetCurrents response:
"Net income for the fourth quarter was $0.04 per share excluding the $70 million pre-tax strategic restructuring charge. The Reuters article can be found at dailynews.yahoo.com Software_3.html."
Alerts:
During the one-week period covered, NetCurrents would have provided the following alerts: Following is a summary outlining the events leading to these Alerts.
Date: May 10, 2000
There was an 18 percent drop in company stock price between Tuesday's close and Wednesday's opening. The online community attributed this price movement to disappointing financial results for the recent quarter, and lower than expected earnings and revenue forecasts for fiscal year 2001.
Date: May 10, 2000
A volume alert was triggered today with 1,973,300 shares traded. Volume during the past 45 days averaged 706,000 shares. The increased movement in shares is attributed to the company's announced earnings and 2001 revised projections.
Press Releases & Other Online Media Coverage:
Company issued a press release on May 9, 2000 regarding fourth quarter earnings and expected losses to continue for the first quarter of fiscal year 2001. Although the online community mentioned weaker financial results, those discussions did not dominate communications.
Generic Software announced on May 9, 2000 the repurchase plan of $10 million in company stock. Some in the online community misunderstood the $10 million repurchase plan and claimed the company planned to buy back 10 million shares of company stock.
Although the company issued a press release stating an alliance with Disney Interactive, Inc. to release Buzz Lightyear of Star Command for Sega Dreamcast(TM), PlayStation© game console, and Nintendo© Game Boy©, the online community did not respond.
ING Barings downgraded the company to a "Hold" rating on May 9, 2000 due to the announced 30 percent decline in future growth outlook.
On May 10, 2000 USB Piper Jaffrey announced the downgrade of Generic Software stock from a "Buy" rating to "Neutral" based on the company's earnings release and 2001 projections. UBS Warburg LLC viewed the stock differently and reiterated a "Strong Buy" rating on the company.
The company announced May 11, 2000 that Shaun Palmer and Kelly Slater entered into a sponsorship agreement to bolster Generic Software's extreme sports games. The online community responded favorably and claimed these two athletes would have a positive impact on the company's success.
The agreement between Ecast and Generic Software to offer Shanghai©: Second Dynasty(TM) on Siren Entertainment System received no comment from the online community. Although the May 11, 2000 announcement provides gamers with a greater variety of PC and Internet based games, communication did not reflect any acknowledgement of the licensing agreement.
Recommendations:
NetCurrents should be actively disseminating all favorable press releases and industry articles to the online communities. Target should include competitor discussion areas as well. Press releases and industry articles should be utilized if online sentiment ever turns negative.
Summary of Online Communications
Following is a brief review of the online discussion for Generic Software:
Extremely positive sentiment towards upcoming game releases and the expected October 26, 2000 release of Sony Play Station 2.
Although earnings disappointed online participants, overall sentiment is that the stock is a good long-term investment.
Mixed views on the impact of the stock repurchase plan, but with the scales favoring a beneficial long-term result.
Summary of Employee Related Discussion
NetCurrents conducted a search of employee related discussions during the week, but did not find relevant information.
Overall Recommendations:
Utilize NetCurrents to update all financial profile information. As indicated, there many inconsistencies and errors regarding key financial and other data relevant to Generic Software.
Utilize NetCurrents to disseminate press releases and favorable industry articles to ensure that online participants are aware of the positive, fundamental strengths of the company. Currently, there is very little discussion regarding press releases.
In additional to the financial universe of Internet sites utilized by NetCurrents, create and monitor a universe consisting of gaming sites, with emphasis on gaming reviews, general feedback on computer games, and hacking. This will allow Generic Software to have immediate access to reviews for new releases, public opinion of violence in games, as well as information on copyright and black market sales issues. This information could be shared internally with other departments as well.
As a starting point, Generic Software should utilize the NetCurrents' InvestorFacts Service, with additional services (Profile Confirmations and Information Dissemination) added on an as needed basis.
Message Board Volume
Yahoo! 46%
Newsgroups 40%
Raging Bull 5%
Competitors 4%
Identities of Top Message Board Posters
abcdefgetc 7%
SPECULAWYER9 5%
gerry_schechter 5%
bigairbrown 4%
Summary of Online Topics
Stock Discussion
Extreme Sports
Castle Wolfenstein
Competitors
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Prepared for: Generic Software, Inc., May 16, 2000
Confidential & Proprietary: The information provided in this analysis contains opinions of persons in the Internet community, many of which may be factually incorrect.
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