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

To: Lowtek who wrote (3210)	1/25/1998 12:31:00 AM
From: Sigmund	Read Replies (1) \| Respond to of 14266

My field is information technology and certainly each distribution channel is different. So it is not surprising if it takes THQI some time to master the PC channel. But I don't have a lot of faith in the ability of third parties to accurately track sales in this area. It sounds like PAX was no great hit. But sales might have been quite a bit higher than these estimates suggest. I guess the question is how many were really recorded as sales in the fourth quarter and how this number compares to what analysts are using to make their estimates. If the company has not oversold these results to the analysts the earnings estimates should be ok. In addition to the absolute accuracy of the PC Data estimate there is the question of the percentage of retail outlets covered and whether or not the estimate has been scaled up to reflect this. I suspect that this has been taken into account, but it is important to be sure. There is the international aspect which I gather you think approximately equals the U.S. sales doubling the total. There is the question of alternative channels. For example if the game is sold by mail order, on the Internet, or as a tie-in with other products. Such sales may or may not be at all significant and may or may not be captured by PC Data. Then there is the major question of when sales are recorded. If sales are recorded when shipped to the retailer as has been previously posted on this thread, this would I assume make the number included in the fourth quarter quite a bit higher than the 37K number in your post. Just as the 18K estimate was doubled to become a worldwide estimate, the 8 - 9k per month estimate for the U.S. might need to be doubled (16k - 18k) to turn it into an international estimate. I am just working from your numbers I personally have no knowledge at all of how this game is selling. If the retailers and other channels sold 37k to customers and have on hand two months of inventory which also was recorded as sales in the fourth quarter, that would make the total recorded as fourth quarter worldwide sales by THQI as being 74k without even taking into account the completeness of the initial 18.5k U.S. fourth quarter sale through estimate. Two months of inventory may be too high but perhaps if the rate of sales was overestimated initially, there may be that much out there and recorded as sales to THQI. If the retailers feel that this is too much, their purchases from THQI in Q198 may be somewhat less than their actual sales to consumers. Again I want to stress that I have no idea how many units were sold anywhere or how much inventory is desirable or actually out there. Please do not place any reliance on any of the calculations I have made. These calculations were done to illustrate a point not to be used by anyone as an estimate of what actually happened in the fourth quarter. I am just working with your numbers and factoring in some estimate of inventory. The point I am trying to make is that it is difficult to take one piece of data and try to draw conclusions from this. The correct answer may be very very different.

To: Lowtek who wrote (3210)	1/25/1998 12:37:00 AM
From: Double Dipper	Respond to of 14266

OK, we have the news on PAX and now we discount it as a wash at best toward this quarters earnings and at worst a little more is held back in reserve to cover any shortfalls. What's the worst than can possibly happen, we meet analysts expectations and not trounce them into the dirt (I still hope we will). This is a significant lesson to us irrational exuberant types. Some good lessons were learned. First of all, forget any hype from gamers who swore how good it was. Haynes, inparticular (among others) swears PAX is/was the best strategy game ever and he plays it frequently online with some of his college buddies. And he may actually believe it is. These opinions may be interesting to hear but are not significant and shouldn't be given any more credence than what they are - opinions. Secondly, channel checks. They get stockholders in the swing of things and make them feel as if they are doing something important and contributing to the stocks performance. Maybe indirectly from the hype, but I believe they are Bogus at best. What is a better method is to obtain hard research reports from independent sources like the Gamer magazines and analysts, not stockholders. Then we can evaluate if they have merit or if the evaluator had an interest or an ax to grind. This is what we should be gathering info on, not at department stores but on the net, at the company, and competing companies. Finding hard facts, Not speculation. Yes I'm still long THQ. But hey, Stagger called this and she should be congratulated. Hope everyone takes this in the spirit its intended. Its my firm opinion that its easy to be blindsided when things are going so well and we need to stay on top of things to be wiser investors. The preceding was a non-pay'd commercial announcement for due diligence, not only before you buy, but as we go along the road of financial wellbeing. Kevin