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Electronics Boutique Hldg (ELBO) Message Board

  • motherrooster motherrooster Nov 26, 1999 9:23 AM Flag


    Reiterates Strong Buy. Raises 4th qtr estimates
    from .92 to .96.......projects 4th quarter same store
    sales to increase to 8% from 3% and raises price target
    from $25 to $30. Also raises FY2000 estimate from
    $1.45 to $1.65. Also describes to SPO as successful
    raising $51 mil.

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    • A poor choice of words perhaps. I should of said
      video games. Don't read too deeply into the phraze.
      "Our" was a reference to all stock holders. I also
      realize that ELBO is not a manufacturer.



    • and that is, a spin-off can be a taxable
      transaction or a non-taxable one. There are complicated rules
      here. In the case of a spin off to shreholders of a
      business in existence for a period of time, the
      transaction would not be taxble to the party spinning off the
      stock i.e. ELBO. The tax effects are important here.
      Taxes often kill these transactions. I don't know all
      of the particulars in ELBO's instance to opine on
      the effects.

      Those wishing to learn more about
      the effect of spin-offs may wish to look at DZTK's
      board and the commentary regarding their planned
      spin-off (tax free in this case) of PSWeb, planned for
      Thursday next. There are several good posts on the

      In our case, here, I would hope that ELBO
      holds its horses for awhile before planning any
      spin-off of EB World until such time that it is further
      developed and working well. I would also hope that ELBO
      grows its traditional business further and perhaps
      expands into other business lines to broaden the base
      business appeal. I would think that the share price would
      be higher at that point as a result of intelligent
      expansion. There are many areas both on the domestic and
      international front that ELBO may wish to exp1ore before
      diluting itself and its share price with an EBWorld

      I am hopeful also that the recent
      secondary exposed ELBO to more analysts which they
      certainly need in order to continue to support the share
      price. The fiasco re: ELBO UK is a sore spot which needs
      some healing and more importantly reaction from
      management here in the US to soothe wounds caused by the
      price drop immediately after the secondary.

      holiday season should be splendid for longs and the good
      news is that we should hear alot about progress from
      management on that front in the weeks ahead.

      I have
      been a strong supporter of ELBO since its public debut
      and have been rewarded nicely. However, I truly
      believe that the best is yet to come, as this issue
      should be a much stronger performer as it gets more
      broadly known and matures.

    • what do you mean by "our product"?

    • A spin-off seems unlikely as long as
      maintains robust volume. Profitability should take a back
      seat to SKU count. For the near future The E-tail side
      of the house need only prevent customers from
      shopping elsewhere.

      That being said: EB World has
      a real good shot at being profitable. Heres why:
      (as explained by RBL) brick and mortar storage and
      distribution networks already exist. Additionally: our product
      is small enough to make e-comerace a viable option.
      (Ever buy a freezer on line?)

      Also, why spin-off
      a company that ends up as your competition? Most
      cooperations spin off a division to exit a production line.
      Example: I held ROK when it spun-off CNXT. ROK exited the
      semi-conductor biz to concentrate on its core holdings. CNXT was
      in no way competitive to ROK's remaining holdings.

      All IMHO, commentary welcome.

    • I think they ought to use some of that cash to pay off the advertising for Anyone have any ideas as to what they are going to use the cash for?

      • 2 Replies to natrl9
      • According to the Pru report, that is what they
        are going to use part of the proceeds of the SPO for.
        In addition, Katicia goes on to say that if the
        advertising drives sales, there is a good chance that will be spun-off as an independent equity some
        times next year.

      • Let me apologize to you and the ELBO board for
        misinformation I posted several posts ago. You had asked if
        anyone knew who had lowered their Q-4 earnings
        projections. I had read the S.S.B. and the Prudential reports
        on Multex approximately a day or two after the
        conference call and attemped to answer your question from
        memory. Obviously, I am getting old and should not rely
        on what was once a dependable resourse...(my mind)
        or should I say lack of same. For the record, it was
        S.S.B and no Prudential that lowered Q-4
        expectations...siteing higher that expected earnings in the core
        business to be offset by a one time extraordinary expense
        from their internet initiative. S.S.B. went on to say
        that even with the additional internet expense, they
        and addtional shares outstanding, they still expected
        ELBO to make their original yearly number. Dah...I
        should hope so, given that we are crushing the original
        number after three quarter, even with the .06 cent
        charge for the I-net subtracted.
        You know, it is
        interesting to me that the Street hasn't yet picked up on
        what is happening here. ELBO is investing $10M in the
        growth of their E-commerce website, via a
        new (more commerce friendly) website format, they
        just finished building a from the ground up, a "state
        of the art" internet call center that will enable
        them to give top notch customer service, they just
        opened a distribution center in order to facilitate
        delivery on the orders they recieve and now that they have
        all the pieces of the infrastructure in place, they
        are rolling out their plan to dominate the internet
        video game business by spending on all forms of media
        and advertising and the building of strategic
        alliances with portals (like the AOL deal) and content
        providers (like the IGN and CNET deals) in order to drive
        visitors to their site. (How's that for a run on sentence)
        Anyway, you would have to be blind not to see this
        strategy unfolding. I just wonder when the price per share
        will begin to reflect this forward thinking and action
        on the part of EB. All this and still projected to
        make their number for the full year. Now that's
        progressive management at its best. Of course, as usual, all
        in my very humble opinion.
        Good luck,

    • Do you have a link to this info?