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

To: Wildman262 who wrote (10626)	4/23/1999 2:19:00 AM
From: Todd D. Wiener	Respond to of 14266

Farrell also mentioned that THQ expects to be one of the foremost publishers for PS2 in 2000 and beyond. He also mentioned that GameFX should be good enough to take advantage of the high-tech PS2. That should calm some folks who believe that several publishers won't have the development muscle to shine on the PS2. Seventeen consecutive quarters of positive comparisons! Number twenty will be Q4 1999! biz.yahoo.com If those clowns who call themselves analysts listen to Farrell's guidance for 25-30% earnings growth for 1999 and 2000, they should boost their ridiculous estimates from $2.28 and $2.68, respectively, to $2.60 and $3.30, respectively. And why did they suddenly drop the forcasted 5 year growth rate from 27% to 19.4%? I really believe the analysts are a bunch of ballonheads. But now, they will make themselves look stupid (rather than Farrell doing it) if their estimates are not bumped immediately up to these levels. After all, THQ can beat these estimates by 10% per quarter going forward, without difficulty. And 10% may be better than 25-75%, since it looks more normal. Ironically, the lower surprise % may be one reason for the good trading yesterday. I say send in the clowns. They've never gotten it right, ever since Lee Isgur followed TOYH in 1996 (and he was better than the current lot of bozos). Only THQ analysts manage to consistently forecast full year EPS as nearly equal to or less than current trailing EPS. Forecasts of $2.28? Trailing is $2.26 or so. Doh! Well, I think THQ should make a video game about a circus, called "Big Top." The main character is an individual shareholder, like each of us, and the objective is to use whatever means necessary (and make use of all available circus equipment) to rack up points. This can be accomplished by shooting clowns (played by our favorite brokerage analysts) from cannons or catapults (for those XBAND fans out there) into a big bullsye target. On the target are various earnings estimates with mine in the dead center: $3.67 in 1999 and more than $4.50 in 2000. Perhaps another game could be called "Great Adventure." THQ could license the name from Six Flags theme parks. This game would use a light gun to shoot at moving targets, either brokerage analysts or burnt out lightbulbs, which are equally dim. After successfully hitting 17 consecutive targets, you get issued dilutive stock options. Another part of the game could make use of a roller coaster, which could be programmed by GameFX to resemble THQ's historical stock chart. Perhaps THQ could add an RPG element to these games, where the gamer gets to experience the development of a THQ shareholder, through all the ups and downs, the neurotic attacks and bouts of extreme optimism and pessimism, frustration, etc. And maybe a multiplayer fighting game could be an option for use over the Net. The SI gang could get together and team up against market makers, much like the upcoming Shao Lin (however, market makers will be available only as an expansion pak, from what I've heard). A 25 P/E would be a $55+ stock. My year-end target of $55 would be 15 times FY99 earnings (and that's before backing out the load of cash the company should have by then). Seems reasonable? One thing's for sure: If concerns about the industry are depressing the stock, just wait until these concerns dissipate over the next 1.5 years. THQ could by SUBSTANTIALLY higher by then. Just imagine the potential when these stocks regain favor. When the industry begins its upcycle, and there are 4 years of clear sailing ahead (perhaps in late 2000), the leading companies are going to get high multiples. If THQ can maintain long-term growth rates of 35-40% (certainly possible), and if it is able to make $5.50 in 2000 (50% increase from FY99's $3.67), it could trade at 40 times trailing earnings (possible), or $220. This would be 29 times forward earnings of $7.50 in 2001 (36% increase from 2000). Slice it anyway you like, but once video games really hit the mainstream mass market, in the next few years, they are going to catch some attention on Wall Street. Especially if there are fewer companies in 2 years. Last piece of babble: I get the feeling that THQ is going to announce something big at E3, perhaps relating to FY2000 game lineup or long-term license agreement. Remember one thing folks--Once THQ breaks out above $32, it's going to rally fast and furiously. Todd