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

To: Todd D. Wiener who wrote (2876)	1/3/1998 5:07:00 PM
From: vc21	Respond to of 14266

Todd, I disagree with you and many others regarding the secondary. I think liquidity is once again an issue for THQ. If they plan on doing six PC titles and at least three N64 titles, (which are quite capital intensive), where is the money going to come from? I know, most of you will say the credit line but Farrell likes to keep this untapped. This seems like his rainy day money. He did the secondary last time at the worst possible time. Why did we need ten million in February when we only had to use it in October? Why not wait to sell the street with the success of World? Why not tap the credit line back then? Maybe Farrell learned from the last horrendous experience. I hope so. In fact, Farrell thought the stock would rise after the secondary announcement. I have told many that if he got 10 million for roughly 15 - 20 % of the company last time, what's going to stop him from getting 20 - 25 million for 12 % of the company now? I don't think current cash flow can maintain all these projects. And if you want to talk about acquisitions, (which I doubt they would purchase all of Inland, maybe 50.01%), then a secondary is a must. Yes, I admit, he could use current cash flow AND the credit line to handle these projects and an acquisition but the past has shown he would rather use cash. So, I think we are left saying, "What will Farrell do?" That's not a question I can answer. If it were me? I would report a blowout 4Q, along with a split and secondary announcement. Then, everyone is happy and it makes it a lot easier to sell the deal. But that's my humble opinion. The flame-retardant suit is on. Fire away !!! :) Regards, Vic

To: Todd D. Wiener who wrote (2876)	1/3/1998 5:17:00 PM
From: Double Dipper	Respond to of 14266

Todd, As always, thanks for the complete response. Your analysis is well reasoned. I have been watching Cendant and believe now that the CU/HFS merger is complete they will begin looking for outside acquisitions. Whether THQ is among them remains to be seen and time will tell. At present, I am more concerned with THQ presenting, (not establishing) a stronger presence in the market place. I still think brand name and company name is an important recognition factor that is needed to get the attention of fund managers and analysts. It is the only shortfall that I can come up with - they appear to be making all the right moves, but - who has heard of them. Ask someone if they know who THQ is and you'll most likely get a resounding NO. Sure hope this is on their agenda for the upcoming year. Again, thanks for the reply. Kevin

To: Todd D. Wiener who wrote (2876)	1/3/1998 8:53:00 PM
From: Sigmund	Read Replies (1) \| Respond to of 14266

Re Secondary: 1. It really is not a good idea to raise equity money for seasonal working capital requirements. The required return by equity investors is far higher than the cost of short-term debt. I assume that Farrell realizes this. If financial ratios are not a problem, I think they will stick to debt financing or factoring to meet working capital requirements. 2. Stock is probably better for making acquisitions than raising cash via a secondary. Using stock that is going up is preferable to raising cash which can be obtained only by discounting the stock. Those issued this new stock will sell it eventually, but this may be more easily absorbed than a secondary. 3. Taking Heliotrope public might make some sense and raising any capital Heliotrope needs directly within Heliotrope via an IPO or strategic alliance presents many advantages to THQI investors. If Heliotrope is successful, then THQI has a large albeit no longer a 100% interest in Heliotrope. If Heliotrope is not successful, it impacts THQI less if it stands on its own. 4. THQI pays no dividends so cash flow from profits is able to be invested in the business. If the projected rate of growth were such to require a secondary, this should not be considered negative to investors beyond possibly the shortest run. If the use of the funds raised was not exciting, then the secondary would be considered negative. That is why I think that if capital is required for PC game development, the wisest course of action is to raise this money separately from THQI i.e. through Heliotrope. 5. If we have confidence in THQI management, we should not be afraid of what they do with respect to managing their finances. Why should we be afraid that they might do something stupid? Even the past secondary which temporarily set back the stock appreciation process, turned out favorably for investors so why should we be concerned on this?