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

To: Joe Casey who wrote (6922)	7/20/1998 7:23:00 PM
From: Kelvin Taylor	Read Replies (1) \| Respond to of 14266

Joe- I disagree with your assessment on exceeding expectations being a negative. What is a reasonable margin to beat? The are many examples in which stocks have suffered dramatic price depreciation because they just met the expectation or beat the number by a couple of cents. It is the company's responsibility to the shareholders to earn a profit and not to please an analyst. The reason THQ has blown away estimates in the past is simply the professionals, who are paid to make predictions, are not doing their homework. These "low ball" numbers are a result of insufficient analysis of sales, revenues growth, the quality of the management team running the company and just plain wrong assumptions on what the company's earning power is and can be. If the analysts were as keen as our good friend Todd about the company's ability to grow earnings, the estimates published would not be so low, therefore 200% blowouts would not happen. I would suggest that after the past couple of quarters of very good earnings the analysts would catch on that they are not looking at the company close enough. After all I would rather the earnings estimates be raised because of much better profits than to be lowered after the earnings exceeded the official number, but didn't exceed by a wide enough margin. Kelvin

To: Joe Casey who wrote (6922)	7/22/1998 1:58:00 AM
From: Marc Newman	Read Replies (1) \| Respond to of 14266

Joe, I see we both have a contrarian attitude towards how THQI will act following the earnings report. It tickles me to hear about all the longs who have been selling off a portion on this run-up, as it means less profit-taking to come, later in the week. It's good to see the new blood, as well. I do disagree a bit with your comments from the post I'm responding to. <<Beating earnings estimates by an outrageous margin may not be as wise as people think. THQ made fools out of the analysts the last two quarters and saw its shares slide down twice as a result. This implies that THQ does not know how to manage its analysts (another example is CHKPF).>> THQ didn't slide from embarrassing the analysts. In Feb. the stock gapped up about 10%, ended the day up 20% and reached a 30% gain before profit-taking set in. The stock then held at $27 and charged back to $32+ (the 30% gain) and was looking to break to $35 before the WCW license loss was announced. The second time, the stock had already had a large run-up and then after earnings we had the two-point gap up and reached a 10% gain ($33+)before (IMO) Wisdom Tree unloaded on us, the shorts ganged up, and Farrell bombed the conference call. I don't think the analysts were that annoyed. For one thing, the video game business is such that a single mega-hit can skew results. No one predicted how well the WCW games would do. Even Todd W. was low. For another, these firms generally get their clients into the stock. It's sort of a game. THQ kills estimates and everyone is happy. Also, its not like there is a THQ "axe" among the analyst community. (Ala Kurlak with INTC, etc.) No one is going to make a rep from a great call on THQ like they would with a gutsy call on Microsoft or GE. This is kind of minor league and attitudes change quickly. Wedbush was negative last fall once we'd reached twenty, but their analyst was (correctly) the most bullish on Quest sales. <<It might be better to beat the 19 cents consensus estimate by a reasonable margin and include bullish comments in the CC about continuing 25-30% growth or more. I believe the most important consequences for the stock are to please the analysts (and bring in new analysts) and have no hints of pessimism in the CC.>> Yeah, I guess we agree on this one. Of course Farrell did state clearly that he saw excellent growth ahead in the last CC but it didn't help. THQI is historically vulnerable to bad news or even a lack of good news in the Jan.-June period. With Quest still two months away there just didn't seem to be any good news on the near-term horizon and thus we bottomed out again just after E3. I look for us to do much better now, especially with the huge game lineup starting this quarter. I read the announcement on the THQ web page as a return to the previous format where individual investors can ask questions. I think THQ has been reaching out to individual investors more in the past few months and I appreciate it. Also, this will allow some wonderful questions to be asked, along with having some sly compliments slipped in, I'm sure. For some odd reason I see this as a hint that a split is coming. Marc