CompuServe Messages

Robert, Yes, there is a difference between losing money and declaring a loss. But there are a couple of things I think you missed. The stock price didn't move on Friday because the 3Q report was not released until after the market closed (it was released about 6PM EDT). I'd expect a lot of activity on Tuesday when the market opens again. While they did do $120M in sales for the quarter, sales normally average $200M a quarter (it was $194.6M the 3Q last year). This puts them in a $80M hole to start. Then you had a massive write down of $65M — this was mostly due to dumping A600s, A3000s, and A3000Ts to liquidators. Much of that liquidation was for the A600. CBM made a huge mistake here. They produced very large quantities of the A600s. This is a machine that was doomed from the start. It offered little to no advantage over the existing A500 and did not have AGA. The A1200 was introduced just a few months later. That killed any possibility of selling the A600 stock. I don't have the figures but reliable sources in the UK report that CBM sold, at full value, about 1/4 of the A600 stock before the A1200 killed it off. This was a mistake on CBM's part to introduce a machine whose realistic sales window was only 6 months, a product that was largely unneeded, and to produce them in such large quantity. Another $70M write down was attributed to sales promotion and restructuring. This was probably due to the closing of the Scotland plant (where A1200s were made) and the final R&D costs of the ECS chipset. The figures probably aren't as bad as they look on the surface — or they could be much worse — who can tell with accountants? But, the bottom line, in my opinion, is that sales were off $80M. THAT'S troubling. And, I believe they're making poor product decisions (A600, CDTV, and the rumored CD based game machine that is (again rumored) to be released this summer in Europe). They appear to be chasing after another C-64 craze with the A600 (that window of opportunity closed years ago) and trying to jump into the Nintendo/Sega market (but without a significant number of titles ready to go, that's doomed — look at Atari's Lynx). I fear they are abandoning, or at least allowing to slip away, the one strong market position they have now — the video market, by concentrating on the low end. Combine this with little to no agressiveness in marketing and developer acquisition, and you see a company with no real direction. I'm basing my remarks strictly on the press release of the 3Q report, press releases of the past, and rumor (reliable, but still rumor). I have no inside info. From an outsider's point of view, all is not rosy. -sja