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

To: vc21 who wrote (6207)	6/20/1998 10:17:00 AM
From: NeverRight	Read Replies (1) \| Respond to of 14266

Looking at your summaries of pe's it appears that if you weigh the pe's by market cap you will get closer to the 22 than your number. Which number is better? Quien sabe!

To: vc21 who wrote (6207)	6/20/1998 10:20:00 AM
From: Sigmund	Read Replies (3) \| Respond to of 14266

Will people be looking at bottom line earnings after charges or paying more attention to revenue growth, non-WCW revenues, and gross margins? I would think the latter. A very aggressive write up this quarter would mean no more later and that also would be seen as positive. Perhaps I have this wrong but I don't see a lot of risk from exceptional entries. As far as PE goes, weighting by market cap does seem more reasonable than an arithmetic average. The industry growth rate would be weighted obviously by revenues. I am not sure that the industry PE is particularly relevant. THQI's PE prior to the WCW fiasco may be more to the point. THQI probably should command a PE similar to what it enjoyed before it lost the WCW license. The WWF license may not be considered as valuable mainly because it is only half a loaf. But with all the other positives, I wouldn't think that THQI's PE will remain much below what it enjoyed in the past.

To: vc21 who wrote (6207)	6/20/1998 12:31:00 PM
From: Bleeker	Read Replies (4) \| Respond to of 14266

The traditional way to calculate P/E is to give consideration to market cap. Clearly ERTS should be awarded a higher market cap than BROD or THQI. Also, some of your entries don't have P/Es because of negative earnings. But you can calculate P/Es with companies with negative earnings and if you do they turn out to be much higher. For example, GE Iteractive has -43 cents earnings and Acclaim has -2.36 earnings, so there P/Es are sky high. Perhaps we are being too conservative by using an industry average P/E of 22, especially if you factor in companies with negative earnings. The other alternative is to leave them out. Do so and you end up with a P/E of 22 using your list (33+41+13.5(THQI)+25+ 11.5 / 6.) Include the negative earnings companies and it is higher still. Include market cap and it's higher. My Street numbers are very conservative. I think you will see THQ trading closer to a 20 P/E by Q4. THQ's P/E was there prior to the WCW announcement, so 22 is a compelling number. As for the Game FX acquisition, I have already talked to the analyst community about it and I feel comfortable with my EPS estimate after the charge. But let's leave some room for surprise. See you on Bastille Day. Aloha, a heads up on a grim article on Hawaii in the new Economist. p.29. It is an interesting piece but a little sad. I had no idea that the state faces a $140 million deficit by June next year. Bleeker

To: vc21 who wrote (6207)	6/20/1998 3:48:00 PM
From: Quad Sevens	Read Replies (1) \| Respond to of 14266

Vic: Bleeker is right. You seem to be assigning a PE of zero to companies with negative earnings. That makes no sense. In fact, it's the opposite of what should be done. Think of it this way: These companies would be doing better if they had, say, .05 EPS, which would make their PEs outrageously high. Here's a way to compute the industry wide PE: For a corporation, PE equals total market cap divided by total yearly net income. Let's treat all of the corporations you listed as one giant corporation. The PE for this mega-entity would then be, naturally, its market cap divided by its income. So we just add up all the market caps and divide that figure by the sum of all the yearly profits* (both positive and negative) to arrive at the desired PE. Do you have these figures handy? Wade *Operating earnings would be best here. True one-time charges should not be counted, including the GameFX charges for THQ.