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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: don ryndak who wrote (27942)	5/5/1998 10:37:00 AM
From: HB	Respond to of 132070

This article claims they were a penny below the First Call mean fnews.yahoo.com and gross margins are down from last year. Maybe that's not worth a 10% price drop (I don't follow MWY enough to have an opinion), but of course there's more to an earnings release than just making a number or not, and always the question of the nature of the company, the reasons for not making the number (random end-of-quarter factors that we shouldn't worry about, or is this a company that tries hard to make their numbers every quarter, and a slip is a sign of bigger problems down the line...)? I think the market can have good reasons for a miss being treated differently in different circumstances, as well as silly ones. Our job is to take advantage of the silly ones! HB

To: don ryndak who wrote (27942)	5/5/1998 11:31:00 AM
From: HB	Read Replies (2) \| Respond to of 132070

You've piqued my interest in this stock (MWY-Midway Games), Don. Eyeballing the chart, it looks like it has considerable support around current prices (now 17.5). I am no technician, but I do look for some kind of trading range to set buy points, usually. I imagine the drop in gross margins concerns some people; it doesn't look too bad to me. Is this outside of a historical range? At a P/E of 15.4 (per yahoo quotes) it doesn't seem too expensive, but what is the typical range of P/E's for games companies? Balance sheet shows ~$6/share book, just under $5 if you remove goodwill. I like a lower P/Book for true dirt cheap value plays, but you have to be looking at a real freakout in most cases (in the current market environment) to get less than 2. Current and debt/equity seem OK. I am a little concerned by receivables: up 27% over a year ago with revenue only up 16.5%. (They are up 49% over 9 months ago, but I don't know if that reflects seasonal factors as well.) Also, for the last half of 97, operating cash flow was negative 12.6 million (there were 38 million shares in March), versus positive 5.14 million in the last half of 96. Recent SEC filings don't turn up anything alarming, although I don't have an expert's nose for danger and there are some obscure registration statements for offerings to employees, etc.... No 144's or other insider sales turned up on my Edgar search. "The Capital Group" went over 5% in Feb.; other SEC 13G/D forms seem to relate to some spinoffs from WMS industries which owned some of Midway, and ownership changes caused by those. The recent buyback (from GT interactive, the country's largest games distributor) of distribution rights to their games in NA and Japan sounds like a potentially very good thing (and also sounds like it may explain some of the shifts in receivables and maybe cash flow). I guess it also increases risk. Can anybody cast light on any of these things? I haven't done a long-term spreadsheet analysis with every quarter's numbers, so I'm just throwing out some casual observations which are not necessarily big worries. Also, don or Mike, if you want to summarize the fundamental story again I'm game. Now, the real reason for owning this sucker. Who wouldn't want to boast of owning a company that sells such obvious classics as "San Francisco Rush" and "Cruisin' World". Are these an unusually interesting brand of "lifestyle game"? Let's see, there's also "Touchmaster" and "California Speed". Hmmm..... Whew, there's "Off Road Challenge." I was worried there for awhile about the, um, orientation of this company. But I guess it's got something for everyone -g-. Soon to come--- "California Off Road Cruisin' Challenge II: Where the rubber hits the road, and the leather hits the dirt" ? I will ask a contact in the PC games industry his opinion of MWY, and report back. Cheers to all, HB

To: don ryndak who wrote (27942)	5/5/1998 12:28:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Don, Actually, I think that MWY just has too huge an overhang of shares for sale from the WMS spinoff and that is hurting prices. But I do believe it is overdone. After all, not everyone is going to sell. Heck, some of us bought WMS in the first place because of Midway. Soemtimes my analysis gets a bit warped, but MWY is selling at half the price of Micron Tech, and it has eps and a growth rate and free cash flow. Wow, what a concept, a company that is actually worth something. <G> I think the stock is cheap and very cheap relative to its chief competitor, Electronic Arts. This is not the best of seasons for game cos, Christmas is the big kahuna, so I wouldn't bet the ranch right now, but I still want to be in this fine co. Every time I take my tour of the video arcades, at least a third and often a half of the games are Midway. That has to help home sales. BTW, I hate to tour the video arcades as everyone thinks a man my age is some kind of pervert looking for little kids. <G> When I'd much rather tour the lap-dancing emporiums. MB