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

To: RealMuLan who wrote (3862)	3/11/1998 5:50:00 PM
From: AreWeThereYet	Read Replies (1) \| Respond to of 14266

Gerald Klauer actually downgraded THQI in the morning (see Andrew's post) but the news just hit the wire after the bell, what a great timing! Richard: good comment, especially the last paragraph. Vic: good CONTROVERSIAL, it is indeed controversy! Todd: Where are you? aC

To: RealMuLan who wrote (3862)	3/11/1998 7:27:00 PM
From: kevin jones	Read Replies (2) \| Respond to of 14266

News we can use............ 3/11/98 THQ Shares Slide After Loss Of Wrestling License To Electronic NEW YORK -(Dow Jones)- THQ Inc. shares tumbled 25% Wednesday, one day after the developer of video-game software announced it wouldn't renew a licensing pact with World Championship Wrestling Inc., an agreement that went instead to THQ's much larger rival, Electronic Arts Inc. THQ (THQI) shares tumbled $7.938 to close at $24.50 on Nasdaq volume of 3.6 million. Average daily turnover is just 255,500. Shares of San Mateo, Calif.-based Electronic Arts (ERTS), also traded on Nasdaq, edged up 12.5 cents to $44.25. THQ said Tuesday it won't renew its agreement with WCW, a professional wrestling league owned by Time Warner Inc. (TWX) that features characters such as Hulk Hogan, Macho Man Randy Savage, Lex Lugar and Disco Inferno. It didn't give a specific reason for its decision. Wednesday, Electronic Arts told The Wall Street Journal Interactive Edition that it signed an exclusive five-year licensing agreement for the world-wide interactive rights to develop and distribute computer and video games based on the organization's wrestlers. EA plans to ship its first title under the agreement in mid-calendar 1999. Financial terms of the deal weren't disclosed. THQ reported 1997 sales of $89.4 million, while Electronic Arts' sales for the latest nine months ended Dec. 31, 1997, were $704.8 million. Analysts covering the companies said the impact of the WCW license shift was largely psychological for both firms. While the contract accounted for 39% of THQ's 1997 sales, the cancellation isn't expected to depress its financial results for the next two years because the deal allows it to continue to sell completed and in-process products as of the December 29 license-expiration date through mid-1999. "There is no near- or medium-term threat to revenues or profits," THQ Chief Executive Brian Farrell said. "This is a very hit-driven business, replacing volume on different properties and different platforms is part of the business." Farrell said there is nothing to prevent the company from continuing to make video games in the wrestling area, perhaps using another licenser or fictitious characters. Before the market opened, Sean McGowan, an analyst at Gerard Klauer Mattison & Co., lowered his rating of THQ from "buy" to "hold," but he didn't change his earnings estimate for the company. McGowan said he lowered the company's rating because the stock had approached his 12-month price target of $34 and because the loss of the WCW license raises questions about how the company will replace the title by the year 2000. "It could prevent the kind of visibility that you would need to sustain a $40 share price," he said. Still, he called Wednesday's activity an overreaction to the news. Stewart Halpern, an analyst at Furman Selz LLC, left a "strong buy" rating on THQ's stock, saying that he believed the stock was very cheap in the wake of the sell-off. He estimates that THQ shares will hit $38 in the next 12 months. "Arguably, walking away from a deal rather than paying too high a price can turn out to be a smart thing to do," he said. Meanwhile, for Electronic Arts the new revenue would have little impact on the company's results. Andrea Williams, an analyst at Volpe Brown Whelan & Co., said the $35 million or so that WCW games bring in for THQ would be almost immaterial to EA, "but strategically and psychologically it's a good win for them." The move further rounds out Electronic Arts' line of sports titles by adding wrestling, where the company didn't have a product. Shares in EA have been on a tear since late Feb. 20 when the company announced it had signed a deal to add golf sensation Tiger Woods to its line of golf games. On that day, shares in the company jumped $4.375, or 11%, to $44 and have hovered near that level since then. THQ, of Calabasas, Calif., develops interactive entertainment software with most of its products based on licenses from sports, movies and arcade games. THQ said it has been successful with its line of wrestling products using the WCW license, and intends to continue with other wrestling games. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved. 4:59 PM --kevin