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

To: Richard Spitzer who wrote (2697)	12/22/1997 8:17:00 PM
From: Todd D. Wiener	Respond to of 14266

I don't know who suggested it, but someone on this thread compared THQI's present price pattern to that of December 1996. The person mentioned that THQI forming a double top. That's not true at all. In fact, it didn't form a double top last year. The stock exhibited a "blow-off" top, also known as an exhaustion gap (for the TA people). The stock peaked at $10.75 intraday, and it declined for 2 weeks until THQ announced its Xmas present to shareholders, the infamous secondary offering. The day after Xmas, I believe, the stock dropped a point in reaction to the secondary announcement. The stock rallied to close the downside gap, and then resumed its slide until bottoming months later at $5.75. There's a fundamental difference between 12/97 and 12/96. Last year, THQ's Q4 was a disappointment, even though the numbers beat estimates. As a result, the year-end results did nothing to slow the decline preceding the secondary. This year, we (at least I do) expect THQ to beat estimates nicely, providing a nice boost to the stock in February. The strong Q1 offerings (games, not stock) by the company should support the uptrend throughout the first half of 1998. After that, we'll have to see what happens. I don't believe that THQ needs to do a secondary (tertiary?) offering this season. Management was well aware of the potential demand of certain titles (especially WCW for the N64), and they anticipated the need for more cash to support manufacturing costs. That's why THQ obtained an increased credit line of $23 million. That means that THQ has close to $40 million in cash to spend on manufacturing costs. Since cost of sales are close to half of total sales, THQ would have to sell more than $70 million in games in Q4 to have a credit crunch. And that would assume that THQ's accounts payable would have to be paid before their accounts receivables would be received. I doubt that this is a likely scenario, especially since it would mean EPS of ~$1.00 in Q4. No worries here. (Nice try, Stag.) Todd Here's a chart of the past 2 years: chart2.bigcharts.com:80/chart?time=9&freq=1&uf=0&lf=131072&type=2&style=1&size=3&comp=&state=0&trans=0&symb=thqi&r=chart&compidx=aaaaa%3A0&ma=4&maval=50&sid=7904&sec=c&xyz=189271953&s=17742

To: Richard Spitzer who wrote (2697)	12/23/1997 12:36:00 AM
From: dave brown	Respond to of 14266

I got a lot out of O'Neil's book... Most of what he says makes a lot of sense (Current & Annual Earnings increases, New Products/Management, Leaders vs. Laggards, etc.) THQ has earned superior ratings in most components of CANSLIM and that's why the stock has and should continue to appreciate. I also agree that it is easier to stay ahead of the game purchasing securities hitting new price highs rather than those hitting new price lows. I would add that I have been more successful averaging up on existing positions with significant gains (like THQI) rather than throwing good money after bad (averaging down on losing positions). O'Neil loses me when he stops speaking of tangible fundamental issues and starts talking about "cups with handles." With all due respect to the TA participants on the thread, if it were that easy to make money using hindsight as your guide, we would all be rich. Overall, I give the book a "thumbs up". To keep things in perspective, I refer frequently to his quote: "All stocks are bad...unless they go up." Dave B:-)