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Acclaim Entertainment (Nasdaq:AKLM) Six Month Target Price: $14.01
  FY 08/02 FY 08/03 FY 08/04  
Revenue (Millions) $308 $379 $502  
Earnings Per Share (diluted)* $.39 $.67 $.87  
52-Week Range $6.25 - $2.08         
Shares Outst. (fully diluted) 91.4 million        
Approx. Float 59.4 million       
1. AKLM, now growing at an annual rate of 30%, is currently trading in the market at 9 times fiscal year 2003 earnings estimate, and 7.7 times fiscal 2004 earnings estimate.
2 AKLM, is a leading worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles.
3. AKLMís fiscal year ends 08/02, AKLM projects $308 million in revenue, and earnings of $38.6 million, or 39 cents a share.
4. 4. AKLM projects net revenue for fiscal year 2003 of $379 million, and expects to earn $66 million, or 67 cents a share
5. AKLM projects net revenue for fiscal year 2004 of $502.0 million, a 32% increase over its fiscal year 2003 net revenue guidance. AKLM also forecasts that net earnings and EPS will grow to $85.0 million and $0.87 per diluted share, a 29% increase over its fiscal 2003 earnings guidance.
6. AKLM intends to release 56 new titleís in fiscal 2003: 17 for PlayStation(R)2; 14 for Nintendo's GameCube(TM); 18 for Microsoft's Xbox(TM) and 7 for Nintendo's Game Boy(R) Advance.
7. AKLM, in fiscal 2004, the Company intends to release between 62-70 titleís across the four leading next-generation platforms.

AKLM, founded in 1987, develops, publishes, distributes and markets, under its brand names, video and computer games for popular interactive entertainment consoles, such as Sony's PlayStation? and PlayStation? 2, Nintendo's Game Boy Advance and GameCube?, and Microsoft's Xbox.

In fiscal 2001, AKLM released a total of 35 titles for PlayStation?, PlayStation? 2, Game Boy Color, Dreamcast and PCs. In fiscal 2002, AKLM plans to release a total of approximately 50 titles for PlayStation?, PlayStation? 2, Game Boy Advance, GameCube? and Xbox, as well as PCs. AKLM develops its own software in its six software development studios located in the United States and the United Kingdom, which includes a motion capture studio and a recording studio in the United States, and contracts with independent software developers to create software for AKLM. AKLM distributes its software directly through its subsidiaries in North America, the United Kingdom, Germany, France, Spain and Australia.

AKLM uses regional distributors in Japan and the Pacific Rim. AKLM also distributes software developed and published by third parties, develops and publishes strategy guides relating to its software and issues "special edition" comic magazines from time to time to support its time valued brands, Turok and Shadow Man.


AKLMís operating strategy is to develop and publish video and computer game software for each of the major video game consoles and PCs. AKLM uses a brand structure and operates its business under four separate strategic business groups or key brands: Acclaim Games, Acclaim Sports, Acclaim Max Sports and Club Acclaim.

AKLM invests in the creation and development of software programming tools that are used in the design and development of its software. AKLM has used these programming tools to create game engines for each of the next-generation hardware systems.


In our opinion, there are 2 ways to value AKLM, one a multiple of earnings, and two a multiple of revenues. According to Multex, AKLMís peer group trades in the marketplace at 40.72 times earnings (for those few companies that earn money). Based on $0.39 per share in earnings for this fiscal year (ending August), this would equate to a stock price of $15.88 per share.

If we look to value AKLM on a multiple of revenues, then we should look no further than AKLMís competition, such as THQI and ERTS. Like THQI and ERTS, AKLM is growing in just about all aspects of their business, the only difference for the most part is, Wall Street has not heard of AKLM. Twenty analysts from the largest brokerage firms in the world cover ERTS, and seventeen cover THQI, but only seven analysts from small regional brokerage firms cover AKLM. If AKLM were to trade today in the marketplace, at the same average multiple of revenues as THQI and ERTS (which is 4.16 times), then based on AKLM's forecastís of $308 Million in revenues for this fiscal year, this would equate to a stock price of $14.01 per share. If you want to do the calculations for next fiscal year and the year after, then maybe you will see what we see ie. AKLM compared to its peers, appears cheap.

With the continued positive outlook in AKLMís revenue and earnings growth, we believe that AKLM is a compelling and undervalued investment opportunity for risk oriented investors. We believe, as Wall Street catches on to the AKLM story, this could have positive effect to AKLMís share price.


Bullseye Stock Profiles (BSP) publishes reports providing information on selected companies that BSP believes has investment potential. BSP is not a registered investment advisor or broker-dealer. This report is provided as an information service only, and the statements and opinions in this report should not be construed as an offer or solicitation to buy or sell any security. BSP accepts no liability for any loss arising from an investor's reliance on or use of this report. An investment in AKLM is considered to be highly speculative and should not be considered unless a person can afford a complete loss of investment. BSP has not been hired by AKLM to do this profile and did not receive any compensation, of any kind, from or on behalf of (AKLM) for this profile. BSP and/or its affiliates or agents have not discussed this profile with the management of AKLM. Subsequently BSP may buy or sell shares of AKLM stock in the open market. This report contains forward-looking statements, which involve risks, and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. For further details concerning these risks and uncertainties, see the SEC filings of AKLM including the company's most recent annual and quarterly reports.

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