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

To: Ron Kline who wrote (6310)	6/24/1998 1:57:00 AM
From: Marc Newman	Read Replies (1) \| Respond to of 14266

Ron, PMFJI, but any profits THQ sees from Bravo, VS, Ray Tracers, and even GITS is just gravy. These games are at the absolute end of their life cycles. The lowered prices aren't even a factor in the AOL board estimates because the games themselves are barely a factor. Games that aren't hits sell most of their copies in the first month or two and have little shelf-life. The nice thing is that the games you mention have been moderately profitable for THQ. Indeed, THQ has said that these non-WCW Playstation games average over 100,000 copies sold. Regards, Marc

To: Ron Kline who wrote (6310)	6/24/1998 4:14:00 AM
From: Todd D. Wiener	Read Replies (2) \| Respond to of 14266

Ron- The reduced prices on Bravo, Vs., Ray Tracers, indicate how weak these titles were. If they were on sale for $15, THQ's earnings wouldn't be affected, assuming the retailers didn't request that THQ take them back. That's not happening. The reason that Q2 earnings aren't affected by retail activities of previously-released titles is simple: THQ records sales (and consequently earnings) when the titles are shipped. So the low-priced titles were probably sold to the retailers in Q4 and Q1 for $25-35 for each unit. If the retailer is selling them below that cost now, it is taking a loss. That's part of the risk of retailing a game that may have a tepid response from the consumer. But the games were successful enough to prevent the buyers from requesting a credit from THQ. I still see GB and PSX titles from a few years ago selling in some stores. Kaybee Toys especially has such a situation. These stores that sell ancient titles (especially for the original price) have awful inventory control. For example, why would a store be selling Alone in the Dark 2: One Eyed Jack's Revenge at $49, a title released by THQ in 1996? Whatever. Anyway, THQ sees none of these sales now, regardless of the price sold at retail. Generally, once the units are sold by THQ to the retailer, that's the end of the story, as far as THQ's sales go. What the retailer does with the merchandise (sales price, number of years on shelf, etc.) after buying it from THQ is its business. Vs. was a poor game. Let's hope that Polygon Magic does a better job with Shao Lin. It looks like they have. Ray Tracers was good, but too short. Consequently, it was a better rental than buy. Hence, the weak sales. I'd be surprised if THQ shipped any this quarter. Taito is also developing G.Darius, which looks really good as a shoot-em-up arcade classic. I expect it to do much better than Ray Tracers. Besides, the racing genre is very competitive. Bravo Air Race, made by XING (makers of K-1:Arena Fighters) was pretty bad. Although it sold well initially, there was little demand afterward, at least from what I'd seen. THQ might have shipped some in Q1, but I bet that's all. I hope that THQ has published its last title developed by XING. Broken Sword was good, but limited largely to people with the Playstation mouse. I figure that THQ is shipping more in Q2, but I don't expect any sales in Q3. Ghost in the Shell was excellent, but its target market was fairly small. There were probably some good shipments in Q1, and perhaps some minimal shipments in Q2. Only the really good, broadly popular titles have 3-4 quarter life cycles. The typical life cycle is 2 quarters. If THQ's 1998 lineup looked like a bunch of Bravos, Ray Tracers and Vs., I'd sell the stock. Fortunately, the 1998 lineup is much better, with several titles having the potential to ship for at least 3 quarters. I hope this helped somewhat. Todd