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

To: Clark W Fobes who wrote (3734)	3/9/1998 3:57:00 AM
From: Todd D. Wiener	Respond to of 14266

1. I don't know much about RENT. But I'm not very interested in a rapidly growing company in a slow growing industry. 2. It would be wishful thinking to assume that Quest 64 could outsell the entire WCW line. However, it certainly is possible. If this happens (Q64 selling over 3 million units), THQI will easily surpass $3.00 for 1998 EPS. If you believe that Q64 could sell 500,000 units for each month in 1998, beginning in June, THQI is going to be a rocket. We'll have an idea after we get the TRSTS data for June and July (in August and September). If Q64 remains among the top-selling N64 titles, we will have a winner. 3. THQI's all-time high was around $128 (after figuring in the 1-15 reverse split in 2/95. In reality, the stock traded at a high of $8.625 in 3/92, about 26 times 1991's EPS of .33 ($4.94 when considering the split) and about 7.5 times book value. In 1992, EPS declined to .19 (from .33) per share, even though earnings were flat and sales rose more than 70%. The shares outstanding increased to 1.448 million shares in 1992 from 828,000 in 1991 (these numbers reflect the split). (In 1994, shares out were 2 million, in 1995 there were 3.5 million, in 1996 there were 4.9 million, in 1997 there were 6.9 million, and I estimate that there will be nearly 7.7 million in 1998.) Q1 1992 was lousy, and the outlook was not good. As a result, the stock sold off from a reasonable valuation (above $8) to about $3 a year later, which was about 16 times 1992 EPS. In 1993 and 1994, THQ had large operating losses, including the write-off of lots of inventory. The stock bottomed at at 10› in 6/95, following the 1-15 reverse split in 2/95. The stock was trading on the National Market until 2/95, when the stock was trading below a quarter per share. The reverse split accompanied the demotion to the Small Cap Market, which was followed by a 50+% drop to its all-time low in 6/95. Accounting for the split (and the price you'll see in most of today's charts), THQ traded at a low of $1.50 in 6/95 (99% lower than its high 40 months earlier), which was less than 9 times the would-be 1995 EPS of .17). The stock was never wildly overvalued, and it declined accordingly, as the company's business took a deep dive into the toilet. FLUSH!!! But, as we can all see, THQ has risen from the ashes (perhaps it should've renamed itself "Phoenix Software") and soared. I seriously doubt that THQI will see $120 any time soon, although stranger (and more profitable) things have happened. If Quest 64 sells 3 million units in 1998 and 3 million units in 1999, if WCW continues to burn up the turnbuckles, if Rugrats becomes a bigger success than WCW, if Dead Unity and THQ's other PC and PSX titles are successful, if THQ's ports of EA's Road Rash and Nuclear Strike for the N64 in 1999 are hugely successful, and if THQ can top 1998's $3.00 EPS with $4.00 in 1999, the stock could hit $120. I reckon that would be a $1 billion market cap in 2 years. Don't mistake what I'm saying as a prediction or estimate. But I'm saying that it's not impossible, because the aforementioned situations are possible. Sure, we could have a 4-bagger from this point on, but I'm not holding my breath. I'm comfortable with a 2-bagger in 1998. We'll talk about $120 when we get to $60. Todd