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   Technology StocksInteractive Entertainment / Videogames

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To: Schiz who wrote (60)3/7/2000 12:48:00 AM
From: vc21
   of 81
Let me put something in perspective for you. Trip and Co spent 14 million last quarter to sell 40 million in games. Farrell and Co. spent 13 million to sell 130 million in games. Sure, your revenue is ramping but your expenses are going along for the ride.

And don't start with the patents. Next you'll tell me they own a piece of CDMA. I'm not blaming 3DO for the valuation of THQ. And I stand entirely by my statement that either 3DO is overvalued or THQ is undervalued. As for waiting for a 3DO:THQ one to one ratio? Well, it may happen. It probably will happen. But regardless, you've got bigger huevos than I do.


Funny Guy

PS - When you say continue to execute, can I take that to mean further exploit Army Men and M & M beyond the total saturation 3DO currently has them at or is there some real execution in the works at 3DO?

PPS- Regarding your internet patents. Ask some knowledgeable 3DO people about the Wintergreen project. I think the name was finally changed to Pipe Dream.

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To: vc21 who wrote (61)3/7/2000 10:52:00 PM
From: Schiz
   of 81
VC, You should double check your numbers. I don't think they're accurate.

I didn't notice any numbers that match the ones you quoted
while comparing the latest earnings releases from thqi and
thdo. To make the math easier I'm just comparing the fourth
calendar quarter of last year.

Here's the numbers

cq4 '98 cq4 '99 % Changecq4 '98 cq4 '99
Revenues 111508 131697 18.11% 10271 41157 300.71%
Cost of Rev. 54811 62405 13.85% 3624 14360 296.25%
Roy. & Aband. 27026 19872 -26.47%
Prod. Dev.(r&d) 2298 3509 52.70% 7365 9341 26.83%
Sales & Mark, 9429 14629 55.15% 2981 12478 318.58%
JV Payments 0 6119 100%
G & A 3240 3912 20.74% 2256 3652 61.88%
Total Costs 96804 110446 14.09% 16226 39831 145.48%
Oper. Income 14704 21251 44.53% -5955 1326 100%

So after looking at these numbers do you still believe that
you can realistically compare the two companies? Not only
are the numbers drastically different but so are the
business models. Is that 6mm all paid to jakks? Will they
be paying more? What is the real profit margin on wwf?

Also, about thqi. Revenues up 18%, operating income up 44%
and abandonment down 26%. Seems the large increase is
operating income is in a large way due to the drop in
abandonment costs. Incidentally, if I looked at the numbers
right, capitalized software costs grew from 3mm in dec '98
to over 11mm in dec'99. That's more than a 200% increase.
Also, thq g&a costs are growing faster than revenues.

As far as mm and army men. You have tunnel vision in this
regard. You don't see the potential in hhbb? Batlle tanx
was successful on n64 and is coming to the psx soon. Heroes
is alive and well. I hope you don't group mm with crusaders
and heroes, they are completely different games. As are
many of the army men games.

It's nice to see there are still some non-believers, that
means there's still much room to go higher when more people
start opening their eyes. THDO did not just get a lucky hit
with Army Men. They are here to say. Take a look at the 2
year chart. THDO is in the process of being discovered. I
expect the impressive year over year stock appreciation to
continue for at least a few more years.

Perhaps I am confused? I guess we'll have to wait and see how things play out.

What's your point about wintergreen?

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To: vc21 who wrote ()3/12/2000 11:35:00 PM
From: Schiz
   of 81
Have you guys looked at this recently?

Does anyone have a good reason they think the leader over the past 2 years won't be the leader over the next 2?

THDO is moving up the npd charts. The movement over the past few weeks is just the beginning. Look for them to continue up the charts in the weeks to come.

Why am I the only one here that seems to see the potential thdo has to grow dramatically over the next several years?

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To: Schiz who wrote (63)3/13/2000 1:16:00 AM
From: Mahatmabenfoo
   of 81
> leader over the past 2 years won't be the leader over the next 2?

A leader in... sales? stock price improvement? technology?

3DO's franchises are maybe a bit "long in the tooth", and past success is not an indicator of future success -- in games or any other hits-oriented business. It's just another game company, albeit one that found a second life after finally giving up on a proprietary platform, which was a gutsy strategy they maybe stuck with too long. Which I guess means that failure is not an indicator of future failure, either.

I'm not saying you're wrong -- just that it takes a lot more than a chart to convince me of a stock's (and company's) "future potential". I mean, all the chart does is say, in fancy way, that because it's going up it will go up. Which is true. Until it isn't.

- Charles

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To: Mahatmabenfoo who wrote (64)3/13/2000 8:33:00 AM
From: Schiz
   of 81
In the context of the post I was referring to stock appreciation. Although I think it's a pretty safe bet that they are also the leader in revenue growth as a percentage.

Keep an eye out. This quarter is shaping up to be really great. I realize it takes more than one good quarter to make a successful company but thdo has been improving for the last two years. This is a trend I expect to continue.

Keep an eye on the npd charts.

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To: Mahatmabenfoo who wrote (64)3/14/2000 12:43:00 PM
From: Scott Miller
   of 81
Regarding 3DO, I'm just not sure why they're successful. I do not know anyone who plays or likes Army Men. That title has zero buzz from my perspective. I'm always surprised to see it continuing, so I guess it must sell, but I never notice it on the sales charts.

Heroes of Might and Magic is a solid brand, but certainly not a blockbuster of any kind.

3DO is one of the stealth companies in our industry, they pretty much go unnoticed. ;-)


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To: Scott Miller who wrote (66)3/21/2000 7:50:00 PM
From: Schiz
   of 81
Seeing as there's nothing else going on here, I'll try once more.

I borrowed my copy of sarge n64 to two people I work with. Both liked it and subsequently purchased it. One of them raved about how fun it was.

You should watch the sales charts more closely. Sarge n64 was in the top 5 rentals for quite some time. It was also in the top 10 n64 games for a while too. I think it was at #2 for a couple weeks, second only to pokemon on the n64.
3d psx was on at least one of the monthy psx charts last year around this time. It also made it back into the top rental charts around christmas. Army men 1 pc was in the top 10 under $20 titles around christmas. I think am2 pc was relatively successful too. 3 (toys is space) was pretty much a dud, it didn't take long for it to be <$20.

Might and Magic & Heroes of Might and Magic are both still going strong.

You say 3do goes unnoticed? Take a look at the 2 year chart. 3do IS getting noticed.

I'm betting that this is just the beginning.

I have to admit that sarge psx isn't selling as well as I had hoped (at least it doesn't seem to be). Also, they've been moving up the npd charts but they only moved up one spot on the most recent charts. It's better than moving down but if they're going to make .38 per share this quarter, they will need to move much higher on the charts. That is, assuming the charts have accurate information.

Europe is an unknown though but I haven't seen anything that would indicate blockbuster sales over there.

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To: Schiz who wrote (67)3/24/2000 2:00:00 AM
From: vc21
   of 81

How in the heck do you expect 3DO to make .38c this quarter? And while you're at it, please explain to me how 3DO is valued 33% higher than THQ. We made 32 million last year. 3DO will be happy (and lucky) to break even. I'm really curious where the analysts got these numbers. Or did Trip forget he is supposed to warn?

To make .38, you'd need 16 million net. Last quarter, during the holidays no less, you made 1.4 million on 40 million in sales, a paltry NPM of 3.4%. Now, let's say somehow you can get that NPM up to 10%. You'd still need 160 million in sales or 300% more than what you did during the holidays. I just don't get it. Please explain what I'm missing.



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To: vc21 who wrote (68)4/3/2000 1:35:00 PM
From: vc21
   of 81

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To: vc21 who wrote (68)4/5/2000 1:13:00 AM
From: Schiz
   of 81
Vic, my apologies for not replying sooner.

I don't feel that .38 is in the bag but if they are to make the .38 I would expect them to do it by keeping operating costs flat or slightly down and obtaining a good amount of sales in Europe. Looks like thqi passed thdo up on market cap recently but as I've said before it's difficult to compare the two because they are much more different than many would believe. The fact that thqi relies heavily on outside licenses and outside development while thdo relies on home-made brands and in-house development is enough to make comparisons very different. Among other things, thdo is growing revenues at a much greater pace then thqi. They don't have the track record that thqi does but they do have Trip and the rest of the management team. Don't forget what Trip did with EA back in the early 80's. Granted, the industry is probably not as wide open now as it was then but EA was an innovator back then and with the next generation consoles being internet capable, that really changes the landscape quite a bit. Who will have the vision to create the innovative content that will drive success 2, 5 or 10 years from now?

I don't feel that luck has anything to do with thdo breaking even this year. They would have to miss the numbers by quite a large margin to not make a profit in fy00. As far as warning, you are assuming they won't make the numbers. It seems obvious by the recent action in the stock you are not the only one that feels this way. I don't think whether they come in a little over or under the q4 estimates has much relevance in the big picture. I'm more interested in what they've got cooking for the ps2 and their internet plans.

You are looking at the math in the worst possible light. You need to realize that an increase in revenues due to more games released doesn't correlate directly with operating costs. A very large portion of their operating costs in the 3rd quarter were from television ads. I would expect this to be lower this quarter. I would think it might be low enough to offset increased development and g&a costs. NPM of 3.4% when you are growing revenues at 200%+ is not paultry!

We will know the fy00 results in early May. Until then we'll just have to wait.

If we don't go any higher before earnings are announced I wouldn't be entirely surprised to see the stock trade up after earnings even if we miss the numbers. The future is much more important than last quarter.

You said "I just don't get it. Please explain what I'm missing."

I've been saying that about yahoo for years. Too bad I wasn't buying instead. I'm not saying that thdo will rise anywhere close you yahoo. My point is that stocks that appear over valued tend to stay that way, especially if they are that way for an extended period. Sometimes the value is not immediately evident. I think it's likely (obviously there are no guarantees) that the biggest reason thdo is down is the weakness in the overall market and the sector itself. This could be a real buying opportunity here. Although there are what appears to be other buying opportunities within the sector as well. Currently I really like thdo and atvi. ttwo and thqi are worth looking at but I don't watch ttwo that closely and I'd like to know more about royalties associated with wwf and if the capitalized software costs on the balance sheet are real for thqi. erts tracks the overall market much closer than anyone else in the sector so it's a little scary from that standpoint but the aol deal seems real promising and we could see a considerable pop with hype surrounding the launch of I guess iply might work as a crap shoot. I wouldn't touch aklm with a ten foot pole. gtis I don't pay much attention to. mwy is kinda interesting. Probably second as far as tracking the market but I'm not crazy about the arcade business in general. I would think it's much more susceptible to a downturn in the economy.

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