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[El-Pistolero]

Listed among the worst companies to work for on more than one occasion, and known to treat its customers like shit. Yet, it still succeeds. It shows you how catatonic and passive consumers are, and how faulty the whole market evaluation process is.

 

[CosmicQueso]

why don't you show me the GAAP figures

GAAP and Non-GAAP. In either case, pretty darn good results for managing both the console and the digital transition as well as a change in leadership.

Say what you will about how they do business, but it's hard to point out where they've done a bad job at managing it, especially recently.

 

[Nirolak]

why don't you show me the GAAP figures

GAAP Profit/Loss for full fiscal year, in millions:

FY10: -$677
FY11: -$276
FY12: $76
FY13: $98
FY14: $8*

* They had to expand the multiplayer revenue deferment window by six months this fiscal year. Otherwise they would be up over FY13.

 

[1st Course]

EA FY13

revenue $3.57B
opt income $0.3B
net income $0.08B

Activision FY13

Revenue $4.58B
opt income $1.37B
net income $1B

https://www.google.com/finance?q=NASDAQ:EA&fstype=ii&ei=4P7LU8i-DYqPwAPj8oHIDQ
https://www.google.com/finance?q=NASDAQ:ATVI&fstype=ii&ei=kv_LU_qoD9SKwwPpsoCIDQ

EA no longer posting losses, but they are still doing very poorly.

 

[Einbroch]

I'm hoping Dragon Age is good and does well for them. It looks great.

And yeah, it really helps that they're dipping their toes in every genre. If one genre is stagnant or dies, they have others to counter the loss.

 

[Y2Kev]

GAAP and Non-GAAP. In either case, pretty darn good results for managing both the console and the digital transition as well as a change in leadership.

Say what you will about how they do business, but it's hard to point out where they've done a bad job at managing it, especially recently.

No, I don't care about "how they do business". I care that they are a dramatically less profitable company than they were 10 years ago!

Their financials have wild swings in them caused by quirks in GAAP accounting and what I'll call "add backs" and stuff like that. What does stick out, though, is their net income margin from 2005 to 2014.

 

[Nirolak]

No, I don't care about "how they do business". I care that they are a dramatically less profitable company than they were 5 years ago!

Maybe I'm not understanding something, but five years ago they lost $677 million.

 

[Y2Kev]

Sorry, I forgot what year it was.

 

[Nirolak]

They definitely don't have the strength of modern Activision or the height of the licensed game market.

Of the three licensed giants (Activision, EA, and THQ), one ended up performing very well, another in sort of a quasi middle ground, and the other went bankrupt when forced to switch off the business model.

The question is if EA can push up margins notably better by GAAP as they're now fully restructured. It should happen via their deferred revenue coming to fruition even if their results stay good, in the same way that Activision no longer loses half a billion when they launch a CoD game.

 

[Daemul]

Nirolak, when are the earnings releases for the major gaming publishers? I know EA's is on the 22nd but I can't find the rest.

 

[Y2Kev]

Now I'm grumpy I had to log on to FactSet today. This is a company that had a net income margin of 20% in 2004 and last year eeked out a .22% margin. Gaming will probably never be as profitable as it was then. Oh well. I think I'll pick up crochet.

What worries me is their R&D expense on an annual basis. Last year it was $1.125Bn despite a dramatically reduced SKU count. In 2009, which was the worst year in their history from a GAAP standpoint, it was $1.145Bn. I just think gaming is too expensive.

 

[PFD]

Dat Real Racing 3 and Tapped Out money

 

[Nirolak]

Nirolak, when are the earnings releases for the major gaming publishers? I know EA's is on the 22nd but I can't find the rest.

Ubisoft: July 10th (already happened)
EA: July 22nd
Microsoft: July 22nd
Nintendo: July 30th
Activision: August 5th
Take-Two: August 5th
Konami: August 5th
Time Warner: August 6th

Some haven't put up dates yet, but they're all in that window.

 

[CosmicQueso]

They definitely don't have the strength of modern Activision or the height of the licensed game market.

Right... they don't. But compared to where they were? It's been a remarkable turnaround recently. It makes no difference where they were 5 or 10 years ago. It matters where they are now and where they're going.

Now I'm grumpy I had to log on to FactSet today.

Sorry. =(

Gaming will probably never be as profitable as it was then. Oh well. I think I'll pick up crochet.

Maybe it won't. ATVI seems to have figured it out though. Maybe others can too.

Crochet is nice. I'm trying oil painting of tall ships.

 

[Daemul]

Ubisoft: July 10th (already happened)
EA: July 22nd
Microsoft: July 22nd
Nintendo: July 30th
Activision: August 5th
Take-Two: August 5th
Konami: August 5th
Time Warner: August 6th

Some haven't put up dates yet, but they're all in that window.

Ah ok, cheers. I'll keep my eye on all of them.

 

[AHA-Lambda]

EA FY13

revenue $3.57B
opt income $0.3B
net income $0.08B

Activision FY13

Revenue $4.58B
opt income $1.37B
net income $1B

https://www.google.com/finance?q=NASDAQ:EA&fstype=ii&ei=4P7LU8i-DYqPwAPj8oHIDQ
https://www.google.com/finance?q=NASDAQ:ATVI&fstype=ii&ei=kv_LU_qoD9SKwwPpsoCIDQ

EA no longer posting losses, but they are still doing very poorly.

Amazing to see the difference given Activision's slim portfolio.

Unbelievable how strong those IP are. Say what you will about ATVI but tey recognise selling potential.

 

[Nirolak]

Maybe it won't. ATVI seems to have figured it out though. Maybe others can too.

Crochet is nice. I'm trying oil painting of tall ships.

Well if we go to select mobile companies they seem to have pretty good margins too, but it of course comes with the risk of being entirely in one field of the industry.

 

[Dr. Feel Good]

Didn't they have a major share buyback in 2012? Wouldn't that artificially inflate the stock price?

 

[Nirolak]

Didn't they have a major share buyback in 2012? Wouldn't that artificially inflate the stock price?

They're doing continuous buybacks instead of dividends on a go-forward basis.

 

[Dr. Feel Good]

They're doing continuous buybacks instead of dividends on a go-forward basis.

So my point still stands? Dividends wouldn't effect the stock price... buybacks would.

 

[Y2Kev]

Right... they don't. But compared to where they were? It's been a remarkable turnaround recently. It makes no difference where they were 5 or 10 years ago. It matters where they are now and where they're going.



Sorry. =(



Maybe it won't. ATVI seems to have figured it out though. Maybe others can too.

Crochet is nice. I'm trying oil painting of tall ships.

The industry would probably crash if all the publishers followed Activision's model. You said in the NPD thread that the lack of SKUs could cause consumers to delay or cancel purchases of next-gen consoles. What would happen if the major publishers put out 2-3 games a year like Activision does?

I will buy some oil paints too.

So my point still stands? Dividends wouldn't effect the stock price... buybacks would.

Dividends certainly affect share price...

 

[Nirolak]

The industry would probably crash if all the publishers followed Activision's model. You said in the NPD thread that the lack of SKUs could cause consumers to delay or cancel purchases of next-gen consoles. What would happen if the major publishers put out 2-3 games a year like Activision does?

At the rate we're going we're almost there (as far as retail titles go)!

I mean look at what Ubisoft, Square Enix, Take-Two, and related companies are releasing this year. It's what, maybe five games a piece if even?

 

[Dr. Feel Good]

Dividends certainly affect share price...

In a vacuum when a company issues dividends the resulting stock price would drop accordingly, not increase. Unless I'm remembering my financial courses incorrectly.

 

[Calabi]

From what I've read the stock market is a complete wasteland, full of hft's skimming, government manipulation, and company buy backs, etc, no real people/companies are investing. I dont think this says anything about EA's potential success or anything, its likely some kind of manipulation.

 

[CosmicQueso]

You said in the NPD thread that the lack of SKUs could cause consumers to delay or cancel purchases of next-gen consoles. What would happen if the major publishers put out 2-3 games a year like Activision does?

I did... and that's the fear.

I guess we could hope for 1st party overinvesting and perhaps the digital standalone games picking up the remaining slack.

Definitely on a fulcrum. Wish I knew the answer, for lots of reasons.

Some parallels to film exist. Studios have gone to more of a blockbuster strategy, fewer releases with more profitable returns and declining theater visits.

Problem with game publishers following this approach is the upfront investment in hardware consumers have to make.

ATVI and others can profit in short term by reducing release count and going for blockbusters, but is it sustainable?

Can't know the answer to that yet. The arguments on both sides are compelling.

 

[Timeless]

Worst trend of financial reporting:

X stock triples in value since Y months ago

What they don't tell you is that Y-1 months ago, the value plummeted.

 

[CosmicQueso]

Pretty solid Q1 results too...