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

To: Harry who wrote (3700)	3/3/1998 9:34:00 PM
From: Todd D. Wiener	Read Replies (2) \| Respond to of 14266

Welcome, Harry. First let me say that I am very comfortable holding THQI right now. I bought more recently at $26+, and I am still convinced that the stock will double by 1999. The recent price action suggests that THQI has been under heavy accumulation, as the up volume has been much higher than the down volume. One of the first characteristics of a successful breakout/breakaway gap pattern is that the pullback is on much lower volume than the breakout event. THQI has typified this TA. In the past several days, the stock has been emulating a sine wave, of sorts. The stock closed today at the apex of a short-term (5 day) symmetrical triangle. The low volume is typical of this formation, as traders aren't sure whether the stock will rise or fall tomorrow. It may do nothing, but it certainly looks interesting. THQ's strengths (not a complete list): 1. Marketing capabilities (international distribution infrastructure, supported by new sales and marketing staff in Europe). 2. Good relationships with retailers (Toys R Us, Wal-Mart, EB and others) and manufacturers (Sony and especially Nintendo). 3. Licensing relationships with Disney Interactive (Toy Story, Mulan, A Bug's Life, Pocahontas, Lion King), Electronic Arts (FIFA, Road Rash, Nuclear Strike, Madden), LucasArts (Lost World, Super Empire Strikes Back), Nickelodeon (Rugrats), Turner Home Entertainment (WCW), B.A.S.S. (BASS Masters Classic) and Brunswick (Brunswick Circuit Pro Bowling). 4. Publishing relationships with various U.S. and international software developers and content publishers (producing titles such as Broken Sword, Quest 64, Ghost in the Shell, Red Jack, Dead Unity, Dark Half, Vs., Speed Tribes). 5. Internal development capabilities (Heliotrope, Black Pearl, Inland Productions (25% owned)). 6. Excellent inventory management and operating leverage (well over $1 million in sales/employee). 7. Excellent balance sheet. 8. Excellent corporate management team that makes #1-7 possible. THQ is really a people company. It's Brian Farrell's management team that is responsible for the publishing and licensing deals that THQ has secured. Although WCW accounts for 40% of THQ's 1997-1998 sales and earnings, THQI is not dependent upon WCW. It has other potential blockbuster titles this year (Quest, Rugrats) and a number of titles that should perform very well (Broken Sword, BASS Masters, A Bug's Life, Dead Unity). After that, THQ has another 20+ titles per year which should support earnings. THQ's margins are not considered very high, although they've improved substantially over the past 2 years. I wouldn't be surprised if ERTS or CD makes a bid to acquire THQ this year, especially if THQ and WCW agree to a contract extension. Todd