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Technology Stocks : Electronics Boutique (ELBO) -- Ignore unavailable to you. Want to Upgrade?

To: ratherbelong who wrote (735)	8/24/2000 2:28:37 PM
From: Czechsinthemail	Respond to of 779

Does anyone have estimates on what percentage of ELBO's sales are likely to be coming from PS2? I've been holding back from investing mostly because retailers generally, and toy retailers specifically, have been so dismal. I realize this is a different story, but I'm concerned that the stock may have reflected much of the PS2 expectation. There may be further upside around the launch of PS2, but there is also a good chance that people will use any strength to unload shares. I believe I heard a discussion of ELBO saying that they would be receiving about 10% of Sony's PS2 allocation in the US. What are analysts forecasting in terms of sales and earnings during the Christmas season? What are the longer term estimates for ELBO's revenue and earnings growth?

To: ratherbelong who wrote (735)	8/24/2000 6:29:00 PM
From: Mad2	Read Replies (1) \| Respond to of 779

RBL, I agree with you wholeheartedly. The sell off in May was compounded by the skittishness (fear is a better word), worries of a very dissapointing 2nd qtr (turned out benign) and of course the complications arising out of the failed bid for funco (a deal I didn't like as the price ran up . These three elements resulted in a highly oversold situation that culminated with the warning on 2nd qtr earnings. If one takes out the concern about soft sales ahead of PSII and awards ELBO a P/E of 15 (argument exists for 20) on the premise that they demonstrate the ability (through new store openings) to grow 15% (eg 20%) per year then we arrive at a fair value of $22.5/share (15X$1.5/share). All in all I view the rise of the past 2 months as regaining lost ground from the mentioned events. I might add that in the midst of the low short interest had climbed to around 300, a pretty high number given the float on this issue attributed to the arbitrage on the funco deal. The last cloud was ELBO's warning that pushed them to just under 13. Looking forward we should get some gas from the PSII (Given what Dreamcast did for ELBO the PSII should attract at least as much new interest), which occured around 4-6 weeks ahead of Dreamcast. I'm not expecting PSII to rock earnings much above expectations, however as hardware margins are poor and ELBO's allocation won't be what we would like (I think they got around 15-20% of Dreamcast and from what I've seen they look to get around 10% of PSII). That said I will view anything over $30/share leading into the launch as a short term selling opportunity, assuming ELBO gets the 10% I infered. ELBO's real story will unfold going into the 4th and beyond as new titles are released and PSII buyers become more interested in games and accessories which ELBO specializes in. I play it as it unfolds, but I may look to flip a bit near the launch (or as earnings release approaches) with the though that we may see a pull back. I'm not good at holding to the top, I tend to get nervous (value buyer charastic) and bail early. In this case however I have >25% position in a taxable account (bought in late April) so I'm going long on that piece. The rest we'll see. ELBO's 4th and 1st/2nd qtrs of next year should be excellent as gamers seek out new titles to play on their toys. Anyway its nice to be in on the ground of what whould be a nice run. Good luck, M2