THQ Shares Rally Amid Takeover Speculation

DJ THQ Shares Rally Amid Takeover Speculation >THQI

By Kate Zhao    Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)–Shares of THQ Inc. (THQI) surged Tuesday amid speculation the game and interactive entertainment software company may be a takeover target for Time Warner Inc. (TWX) or Viacom Inc. (VIA). “We do think that both Time Warner and Viacom are interested in the gaming space,” said ThinkEquity analyst Atul Bagga, adding that in the recent earning calls, the companies’ managements have talked about an increased focus on gaming. Competition among media conglomerates has intensified, and both Time Warner and Viacom are looking for new revenue growth opportunities. Wall Street Strategies analyst Brian Sozzi pointed to THQ’s successful cost-cutting moves over the past year, which have expanded margins and made the company more attractive to potential suitors. A THQ spokeswoman declined to comment on speculation, as did both Time Warner and Viacom. THQ shares closed up 13% at $7.46 after earlier surging as high as $7.57. Sozzi has THQ’s price target at $9 but said if either Time Warner or Viacom is going to buy the company, they probably will pay $12 to $15 a share, at least a 60% premium. Analysts also think other gaming companies might be takeover targets. “While we won’t be surprised by an offer for THQ, we believe that Take-Two Interactive Software Inc. (TTWO) could be a better take-out candidate,” said ThinkEquity’s Bagga, adding that Take-Two has a number of strong franchises and a number of wholly owned Internet Protocols. Wholly owned IPs not only carry higher profitability, but also are more valuable to media companies because they could be adapted into movies, TV serials and online destinations. Take-Two shares closed up 5.1% at $11.72 on Tuesday.   -By Kate Zhao, Dow Jones Newswire; 212-416-2665; ying.zhao@dowjones.com

Deckers Shares Rise On Aug Retail Sales, Optimism For Fall

By Kate Zhao Of DOW JONES NEWSWIRES NEW YORK

(Dow Jones)–Shares of Deckers Outdoor Corp. (DECK) rose nearly 7% Tuesday, helped by stronger-than-expected August retail sales and as analysts said the footwear and apparel company is well-positioned for the fall season.

In recent trading, the stock was up 3.7% at $74.80 after earlier rising as high as $76.80. Shares are off 6.7% so far this year.

Despite the popularity of its Ugg brand, Decker is dealing with slowing growth. Second-quarter Ugg sales increased 23%, well below a 67% surge in the first quarter. But analysts commented Tuesday that boot and outdoor footwear sales always perform better in fall and winter seasons.

“There is an industrywide trend towards boots,” Piper Jaffray analyst Jeffrey Klinefelter said, while also adding investors are recognizing stronger retail sales across the country will lead to refreshment orders for vendors.

The U.S. Commerce Department said Tuesday that retail sales last month exceeded expectations and climbed 2.7%. Wall Street expected a 2% increase in overall retail sales.

“We think the company has great long-term potential,” said Klinefelter, adding that the expansion across Europe and Asia markets will also help boost Deckers’ sales globally.

Deckers now sells in the U.K. and other European and Asian countries through outside distributors. Klinefelter expects the company to continue expanding both distribution agreements and direct agreements over the next several quarters and said it also has opportunities to further develop some smaller brands domestically, such as Teva, Simple and Tsubo.

-By Kate Zhao, Dow Jones Newswire; 212-416-2665; ying.zhao@dowjones.com