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Non-Tech : Radica Games (RADA) -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (5986)	9/8/1998 7:31:00 PM
From: Zirdu	Respond to of 7111

I for one would be opposed to Radica spending money on advertising the company, as opposed to advertising it's products. I am always turned off by companies that spend their funds on promoting their company's stock, rather than on promoting their products and services. Such a course smacks of desperation, in my opinion. Also, in my experience, I have never seen such a course of action work in the long run. There is only one thing that will get this stock the respect all the longs are hoping for. That is for Radica to post at least a year or so more of positive and increasing year over year earnings comparisons. We have only 8 quarters of positive earnings behind us. That is apparantly not enough of a track record for the market to believe that the high earnings growth of the past few quarters can be maintained into the future. We are trading at a trailing PE of less than 6. Given the guidance at the CC, we can conclude that PE on 1998 FY earnings( I assume about $2.50) will be just over 5. Price to sales on a 12 mo trailing basis is about 2 times. I think even the bears and shorts would probably believe that Radica will have a fairly good 4Q of 1998, and in line with guidance at the CC. I think it is 1999 and beyond that the bears in this stock are predicting trouble. It looks to me like the market is now pricing RADAF stock on the assumption that earnings in 1999, 2000 etc, will actually be considerably LESS than 1998 FY earnings. The fact that the stock trades at a PE of 5 (that is an earnings yield of 20%) means that the market does not believe that the current earnings can be maintained, much less grown in any meaningful way. So, if you believe Radica CAN just maintain it's current earnings level into the forseeable future (with even no growth), the stock is a huge bargain at these levels. Because if Radica can just maintain it's current level of income, it can afford to keep buying back stock and buying back stock, until the market will simply have to recognize the value inherent in the shares. And if Radica can actually grow it's earnings year over year in FY 1999 and FY 2000, this stock will very richly reward any current holder in stock price appreciation. If, on the other hand, the bears and the shorts are correct, and Radica's future earnings power FALLS considerably from it's current levels, then probably the stock price will collapse further.

To: chaz who wrote (5986)	9/8/1998 7:40:00 PM
From: Zirdu	Read Replies (1) \| Respond to of 7111

Things said in the conference call that might have emboldened the shorts and bears on Radica: 1. Radica has not been approached by MAT or HAS or any other company for a buyout or business combination. Of course the one thing a short would naturally fear is a takeover of a stock he is short. That is apparently not in the cards at this time, and I think this fact would have been a big relief to the shorts. 2. Sales growth in the fishing category has slowed to the point that there is no longer any growth in the fishing category, it is just maintaining it's level of sales. I think the shorts and bears believe that soon the fishing category will start to decline in revenue, thereby putting a crimp on Radica profitability. Feeley said in CC that he has been repeatedly asked how fishing will do in FY 1999, and he says he doesn't know.