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MutantMaggot
03-09-2007, 11:30
I know many threads have pointed to a loss in GW profits, and losing money, but just how desperate are they? The thread "GW success" or something similar, gave an apt description of why this may be, but looking at the following, how much in debt is GW?

I. The "free postage" deals on the web have recently gone from £100, to £50, and to £25.

II. GW releases Apocalypse, a game that encourages people to expand their army size, and buy more models.

III. Ages ago, LotR was released. Was this to mask their debt, or is it only just becoming so?

IV. GW previews models earlier in advance, and fully painted models are the only images. Is this to make people buy more models?

V. GW is forced to use empire models to fill a gap in the release schedule. Technical problems with the other races?

VI. New models are being released every month. Is this necessary?

VII. WD begins to have a strong focus on new models -- is GW really placing it's hopes in new releases?

VIII. WD has lost a lot of staff recently. What is going wrong,and why do they feel the need to leave? This increases the pressure on individuals.

IX. GW has to satisfy it's ever growing gaming population. Are our demands too great?

X. Newcomers are focussed on in WD and advertising -- do they make more money out of them than veterans that already have large armies?

So, what do you think? Is it our fault GW is losing money, and how fast is it losing the valuable cash?

Mad Doc Grotsnik
03-09-2007, 11:45
Well, I'll start off by pointing out that a lot of what you are saying is purely assumption based off dodgy interpretation of events. I'm not having a go, I'm just saying is all.

For example, you mentioned/put forward that GW were *forced* to release extra Empire stuff. Is it really forced due to technical difficulty with new stuff, or is it simply a new marketing strategy they are trying? Remember, right up until the start of the Nemesis Crown, Dwarfs, Orcs and Empire were receiving new things!

New models being released every month? Well, it might not be necessary but it is a good move. Why? It gets players of those armies into the Stores whenever something new comes out, which brings with it the opportunity of cross over sales of other stuff.

As for WD concentrating on new models, well, it always has, even in the semi-mythical 'good old days' it had catalogue pages in the back showing off new models and their component parts, so absolutely no change in tact there.

WD has lost a lot of staff, but this is largely due to condensing WD output, rather than pressure on staff to leave. Sure, now that one team is producing multiple WDs, some might have decided the work load isn't for them, but one came before the other, and also represents downsizing concurrent with a single output.

Are our demands too great? Absolutely. It seems a lot of people have difficulty understanding that GW only seek to satisfy gamers to line their own pockets, just like every other non-charitable organisation!

In the short term, of course you make more money out of a newcomer. For example, I've been playing Warhammer for yonks now, and I have every 6th/7th Edition book released thus far, but only raised 4 armies during all of 6th, and whats been of 7th. A Newcomer has none of these things, and unlike me, again for example, no real structured way of buying an army. I'll settle on the flavour for me, and then plan the army, before buying it. A Newcomer is likely to make fairly random purchases based on how much they like a given model.

LotR was not an attempt to cover up losses. Indeed, it's success is the reason GW have floundered in recent years. It paid for massive expansion which wasn't sustainable, hence the closing of stores now. Not so much an act of desperation, as one of consolidation. Drop the chaff, hold the wheat. GW are still a couple of years off absolute crisis point, hence the shedding of dead weight now, before it becomes wholesale closures.

Free postage. I dunno about that one. I guess it's an attempt to ensnare more sales on there Website than 3rd Party ones. Either way, it's the customer that stands to gain. A nice gesture, and I'm not sure it would make *that* big a difference to their income...

Apocalypse...something like this would take years to put together. It's entirely possible it's been in the pipes since, oog, before 4th Edition at least. I know I first heard about the Plastic Baneblade shortly before the latest IG Codex was released, back when I worked for the company!

In summary (I don't think I missed any of your points) GW is no more desperate for your cash than any other Leisure company out there!

Crube
03-09-2007, 11:47
New models were always released every month, nothing new there...same with WD focussing on new models.

Painted models look better than unpainted ones. Ages ago, the stores would just have to black up a new model - ie cover it in black shoe polish, and buff it up. No new releases have to be painted.

The newbie vs vet has been debated to death on these very boards - I dont think theres ever going to be a resolution here ;)

Having said that, the release of Apocalypse seem to be something to appease the vets, as well as being an excuse for everyone to buy for tanks.

The freepost thing is interestinig. Is this in place of being able to offer deals on items. Remember the old Wheelz of Steel promotioin - buy 2 get another half price type thing?

LotR was (afaik) a very successful range that made GW a lot of cash in the short term. Now whether it's masked the rest of the range losing money is open to debate...

Osbad
03-09-2007, 11:53
GW have always been desperate for money. The thing was that in the past GW thought that all they needed to do it was increase the prices every so often. It has finally dawned on the "fat and lazy" (Kirby's own words) senior staff that this is no longer enough to retain our business!



I. The "free postage" deals on the web have recently gone from £100, to £50, and to £25.

Sound business practice. GW's own store is competing with many web stores who offer GW-20% or so plus free postage. GW's sole competitive advantage here is that they can guarantee delivery (Allegedly! Some may beg to differ!) where web stores may be out of stock and can also do (a decreasing number of) bitz. Reducing the postal cost disadvantage should increase business here.


II. GW releases Apocalypse, a game that encourages people to expand their army size, and buy more models.

Yup. Hit it on the head.


III. Ages ago, LotR was released. Was this to mask their debt, or is it only just becoming so?

Gw took on the LotR licence to earn a profit. Back then they were making a profit already without it.


IV. GW previews models earlier in advance, and fully painted models are the only images. Is this to make people buy more models?

Does it make you buy more models?

Personally being convinced that GW wouldn't instantly forget about the models I just bought the moment they stopped being "new releases" would do more to convince me to buy something, but GW probably believe otherwise. They may be onto something there.


V. GW is forced to use empire models to fill a gap in the release schedule. Technical problems with the other races?

New rumour on me. About the only "technical problem" I have heard about is dropped moulds, but what do I know?


VI. New models are being released every month. Is this necessary?

They've always produced new models every month. Arguably with CAD sculpting, producing new plastics is easier than it has been hitherto, and quicker. Chicken and egg really.


VII. WD begins to have a strong focus on new models -- is GW really placing it's hopes in new releases?

The ultra-focus on new models started started with issue 316, but it was always there to some extent. What changed was the dropping of any content that was not anything to do with new models! The last couple of issues have righted this a little. But GW clearly believe that coverage of new models sells new models. See my answer to IV above.


VIII. WD has lost a lot of staff recently. What is going wrong,and why do they feel the need to leave? This increases the pressure on individuals. GW announced 10% staff redundancies in May 2007 as a result of a huge cost-cutting programme following on from abysmal sales performance over the last 2 years. They last had a purge of staff for similar reasons in and around May 2005.


IX. GW has to satisfy it's ever growing gaming population.

I suspect the population playing GW games is actually shrinking somewhat. Certainly they bought less last year than the year before (and the year before that and the year before that...)


Are our demands too great?

Probably. But that's not our problem.


X. Newcomers are focussed on in WD and advertising -- do they make more money out of them than veterans that already have large armies?

GW used to explicitly state that they believed their typical customer bought stuff for 2 years then disappeared off their radar. So they focussed on selling stuff to them to the max for that period and reduced their production of stuff that was of interest to players of longer standing.

There has been some rhetoric from Kirby that recognises this for the bull-poo it was, but movements to rectify it are slow in coming. But on the other hand, people who "stay in the game" for more than (say) 5 years are probably few and far between as most will get bored with the game by then or have major personal life changes come along etc.


Is it our fault GW is losing money, and how fast is it losing the valuable cash?

Nope. It's GW fault entirely. If they produced stuff we wanted to buy at a price we were prepared to pay, then they wouldn't have a problem.

Blaming the customer for loss of turnover is like blaming the sea for making you wet if you jump in it!

MutantMaggot
03-09-2007, 12:32
OK, that has flawed most of my pooints, but the main discussion is:

How fast is GW losing money?


As for WD concentrating on new models, well, it always has, even in the semi-mythical 'good old days' it had catalogue pages in the back showing off new models and their component parts, so absolutely no change in tact there.

True, but I'm referring to the way that with every new release, the game system with that release gets hundreds of articles, and the other systems get only one article. Take Harlequins for example: a small release, yet a massive fuss was made over them. Was it really necessary? I'm inclined to think that in the old days there wasn't a good website, and they couldn't just include the designers' notes and batrep in the WD, and the models on the web, but they had to include it all in the WD. Nowadays it would be better if they put some information on the web, and left the WD for a reasonable amount of articles for each system.


Apocalypse...something like this would take years to put together. It's entirely possible it's been in the pipes since, oog, before 4th Edition at least. I know I first heard about the Plastic Baneblade shortly before the latest IG Codex was released, back when I worked for the company!
Hmm... nice to know, and a good point.


In summary (I don't think I missed any of your points) GW is no more desperate for your cash than any other Leisure company out there!
I just gave a few examples, and I'm sure there're more, but I'm convinced that you are mainly right in that, though GW is losing money.

Overall, some very good responses, and I am proven wrong(ish) it seems. :cries:

MutantMaggot

Nyarlathotep
03-09-2007, 12:40
Personally I think this is a pointless thread. How can anyone on this forum have any kind of knowledge of GW financial situation? do their accountants post on the forum regularly?
They are about as desperate as any other company for money.

MutantMaggot
03-09-2007, 13:09
I'm asking for peoples' views, based on the evidence we have, not facts.

And thankyou for your incredibly interesting and thoughtful post. :D (No offence meant.)

Nyarlathotep
03-09-2007, 14:19
But the "evidence" you have presented is completely wrong! as has been stated by previous posts.
And evidence has to be factual... otherwise it is not evidence.




I'm asking for peoples' views, based on the evidence we have, not facts.

And thankyou for your incredibly interesting and thoughtful post. :D (No offence meant.)

MutantMaggot
03-09-2007, 14:36
Perhaps, but they were just suggestions, and points for discussion. Please do not presume to believe I don't realise I was wrong, but how does that affect you?

And please, can we get back on the main topic? Try giving suggestions of your own, or making the thread more interesting, rather than posting pointless, and frankly quite unfair posts.

As for the evidence, I mostly gave evidence that is true, just does not necessarily point towards what I suggested. The rest were suggestions and theories.

Overall, I gave them as points for discussion. Please don't argue about that.

Mad Doc Grotsnik
03-09-2007, 16:08
And I'd just like to bring up one small point...

GW did make a loss, but it's not because they failed to cover their running costs!

Indeed there was something called an 'Exceptional Charge' which ate up what small profit margin they made, and needed some extra cash as well. This charge was to pay for the company restructuring, which we are reliably informed will cut running costs by a not inconsiderable £7,000,000 per annum!

So, technically, GW is still a profit making company, but they took a cut to make that profit all the more comfortable in the future.

OF coure, whether it works or not?

MutantMaggot
03-09-2007, 16:24
That's definately very good, but why are there these rumours that GW hasn't renewed the New Line (TM) licence? Is it no longer necessary? Or is GW going to scrap LotR?

Nyarlathotep
03-09-2007, 16:44
That's definately very good, but why are there these rumours that GW hasn't renewed the New Line (TM) licence? Is it no longer necessary? Or is GW going to scrap LotR?

I know for a fact GW definatly isn't going to scrap LotR. It is their biggest selling range after WH40K.
I dont believe that they had to renew the licence.
Sorry to be blunt in my previous posts, its just I know GW isn't in in trouble.

MutantMaggot
03-09-2007, 16:51
That's good, and I don't mind about the bluntness, but that leaves one question... How do you know this? Are you really a GW spy? BURN HIM!

Mad Doc Grotsnik
03-09-2007, 16:51
Because with the Tolkein Estates License, they can cover all of LotR anyways, without having Trolls look like Trolls in the film etc...

MutantMaggot
03-09-2007, 17:08
So they can look like proper trolls now? Excellent...

As trolls were created in mockery of ents, they should be effectively walking stone, in the same way as ents are beings made of wood.

Thanks, Mad Doc Grotsnik. ;)

Mad Doc Grotsnik
03-09-2007, 17:22
Theoretically, provided of course the License isn't picked up again.

IF it's not, then I suspect all current, film based sculpts would have to be binned, and then replaced.

MutantMaggot
03-09-2007, 18:17
...Or they could make lots of the models, then sell 'em all at cheap prices, while still making a profit...

yabbadabba
03-09-2007, 19:18
I. The "free postage" deals on the web have recently gone from £100, to £50, and to £25.

As already stated, that's GW catching up with the times. Whatever the promotion they won't be losing money.

II. GW releases Apocalypse, a game that encourages people to expand their army size, and buy more models.

All GW games are about that. Many companies specifically run with that process in mind - spend more money with us and not Bob down the road. As far as Apocalypse specifically I have heard good and bad things so I will reserve judgement. If the rules are significantly different from 40K, this will be GW's first new game since LOTR!

III. Ages ago, LotR was released. Was this to mask their debt, or is it only just becoming so?

GW took the licence for 2 commercial reasons: 1) Money and 2) If they didn't somebody else would have. That they used the money made to prepare the company for increased business which they can no longer justify, is a mistake in my mind.

IV. GW previews models earlier in advance, and fully painted models are the only images. Is this to make people buy more models?

Yes - it's called promotion and advertising. Don't mind that at all.

V. GW is forced to use empire models to fill a gap in the release schedule. Technical problems with the other races?

As GW never tells anyone outside of it's inner circle what promotional theory they are following, we cannot say why they did this double release. That they did it with Orcs, Dwarfs and Empire makes me think they were going for 2 bites of the cherry. This is old news as GW used to do it before - remember when an army list would come out with only half the models? Lack of resources and time I can understand. Double hits for cash on a race I can understand. Time for conversion opportunities? Yeah - right. Technical problems would be an admission that the studio is crippled. As this is the heartbeat of the design process, and ultimately the company, I cannot see that. GW might cut back a lot but it will not compromise the studio.

VI. New models are being released every month. Is this necessary?

They have always done it. New releases are a sales driver so they will not stop that soon. It works in fashion and console games too. You might not want that new IG tank but lookign at it might encourage you to buy some more AT for your army.

VII. WD begins to have a strong focus on new models -- is GW really placing it's hopes in new releases?

The best time to cash in on a new product is in the first few months. It appears that GW have worked on a 3 month basis for that. As WD is their only external marketing tool (web doesn't count - you have to find that) I don't mind the big focus in the magazine.

VIII. WD has lost a lot of staff recently. What is going wrong,and why do they feel the need to leave? This increases the pressure on individuals.

It could be centralisation and a redefining of WD has to do. If it has become a company marketing tool, then this has to be done, in it's majority, centrally, with additional bits like local promotion done via the various global businesses. There is no point having 2 people doing 1 person's job, especially if WD now had only 1 global message. Putting people under pressure isn't a problem, especially if the company is underperforming. Is it the right kind of pressure?

IX. GW has to satisfy it's ever growing gaming population. Are our demands too great?

I think that there are two answers here, and one is subjective. First I don't think GW has ever solved the question of "Who are our customers and what do they want?". Their communications with their customer base from a central position is awful. Their knowledge of the customer base is non-existent and probably based on anecdotal evidence and sales figures. If true it is often a case of suck it and see. If they learnt to communicate with us better (bearing in mind communication is 2 way and based on mutual undertsanding and respect) then I think they would benefit, as would we.

The subjective part is we as a community have become subject to our times. When I started the goal was to collect and paint an army to play with. Because many of the people I grew up with were Napoleonic gamers an army was often hundreds of figures. The idea of sitting down for a year or two on one project was the norm. I used to know one guy who had a 6000pt army for each IG regiment - in metal. All painted! Now I see too much emphasis on RAW, Tournaments, and the "metagame". Nobody seems to have the time to make the effort to turn the hobby into their own thing. I think we (and I include myself here) have become lazy, demanding instant gratification and pout when we don't get our way. It can be easy to see why GW wouldn't want to talk to us!

X. Newcomers are focussed on in WD and advertising -- do they make more money out of them than veterans that already have large armies?

I don't mind this at all. I think short term Beginners make more money for GW (think of all those paints, brushes, glue, models you already have that a beginner has yet to buy). I also think alot of what GW does should be aimed at taking a beginner and guiding them until they can walk alone in this hobby. I think WD is ideal for that. But there should also be something for them to move onto and discover all us old lags enjoying ourselves and complaining that GW is taking more of our cash with more cool product!

Horus84
03-09-2007, 19:19
how much in debt is GW?

I can confinatly say that GW is not in debt to any investor or whoever. GW has and is one of the most well invested companys going around. Generally they pay for everything straight up. The HQ in Baltimore was paided in full (including the achres of land around it), the 10 modern plastic moulding machines, all paided in full etc....

You can find this sort of stuff out if you are a would be investor, as it is the sort of info you need to know.

GW IS in fairly good shape. The biggest problem they have at the moment is customer retention. This is due to many factors - all of which are talked to death on here. However, they are, although slowly making positive changes to stop this.

Nyarlathotep
03-09-2007, 19:33
Ill say again.... there is no way that GW is dropping the LotR licence or replacing any of the models with 'alternatives'

Little Aaad
03-09-2007, 20:48
I think they make a fortune. They use cast for metal models and their plastic isnt worth majarine tubs!

RevEv
03-09-2007, 21:05
AFAIR GW almost sold its soul to get the LoTR licence - just look at the prohibitive restrictions it accepted from New Line to be able to produce the models. This was paid back many fold by the profit they received from the game.

That it has taken so long for GW to feel the squeeze on the general downturn in leisure spending in the UK, and further afield, is partly because of this. This does not disguise the fact that GW have treated vets very poorly over the last few years, and that is now coming back to bite them (vets tend to have more money to spend).

As for apocalypse being a sign of desperation - come on. That is ridiculous. As a vet apocalypse is one of the best things GW have done for us in the past few years.... no newbie will collect and paint a big army for such an event.

WD promoting new models/ promoting the game to newbies. Get real - WD is a catalogue for a company that sells thing. What else will it be? I remember the very early WD I used to browse in the newsagent (to read thrud the barbarian) I got very annoyed by the increased coverage of Warhammer over D&D.

Mad Doc Grotsnik
03-09-2007, 23:03
No we don't!

Little JimmyTimBob spends all his income on GW.

Me, I spend my WAGE on Rent, Ciggies, Beer, Car, Bills, and then a bit each month on GW if I need/want something for one of my armies.

Thats a pretty big difference!

Bloodknight
04-09-2007, 00:35
Well, if you spend less for GW than little Timmy then either your wage is too small or Timmy gets too much money. I spend about 50€ per month in GW stuff and get a lot of stuff on birthdays and for christmas (mind, I am about 28 ;)) and I would spend more if I weren't a student.
I own several quite large armies and my head spins at the opportunities Apocalypse (which also has good beginner deals like the 3 basilisk box or the imperial guard company), the new Chaos codex and the upcoming Ork codex provide, and thatīs before factoring in the new stuff for WFB. In the last five years GW rarely got me really excited, but this is going to be good :).

sebster
04-09-2007, 02:41
This is silly. The OPís questions are full of assumptions.

Basically, GW is not desperate for cash. Their operating activities are still generating decent cash flows. They made an accounting loss, but that was largely due to the restructuring as already mentioned. GWís problem is their sales decline indicating there may be a long term problem for the company. GW knows this, and isnít do anything that could be sensibly construed as focusing purely on short term cash flow. The changes they have made to their company have been long term changes to meet off the (seemingly) anticipated long term lower sales base - store closures, streamlining warehousing and distribution, basically lowering long term overhead costs.

GW has issues it needs to solve to secure its long term future. Those problems have nothing to do with the OPís assumed problems and solutions.

MutantMaggot
04-09-2007, 09:29
1. They were suggestions and theories, not facts

2. Please read the thread. It really does help.

3. The thread is about GW's present financial situation, not my theories as you should have worked out if you'd have read the thread. Please don't make me repeat myself again.

Griefbringer
04-09-2007, 09:46
The thread is about GW's present financial situation, not my theories as you should have worked out if you'd have read the thread.

For hard facts on GW financial situation, I would recommend checking out their latest financial report - released a month ago or so.

There you can find quite some hard numbers.

Bombot
04-09-2007, 11:04
So, technically, GW is still a profit making company, but they took a cut to make that profit all the more comfortable in the future.

No it wasn't. Those costs are real costs, whether 'exceptional' or not. Don't let accounting lingo fool you.

Going forward, it might be profitable (and I expect it will be), but that was a fair old loss to make up.

yabbadabba
04-09-2007, 12:24
1. They were suggestions and theories, not facts

2. Please read the thread. It really does help.

3. The thread is about GW's present financial situation, not my theories as you should have worked out if you'd have read the thread. Please don't make me repeat myself again.

Easy MutantMaggot.

MutantMaggot
04-09-2007, 12:27
:D I just hate it when people don't read the thread...

grickherder
05-09-2007, 03:24
There's nothing exceptional about those expenses. Calling them that is investor relations propaganda. When you lose money and start closing loss making stores and restructuring, the whole situation might be exceptional, but the actions you take are quite normal and should not be separated out to make things look better than they are.

sebster
05-09-2007, 05:12
:D I just hate it when people don't read the thread...

I read the whole thread. I'm quite puzzled as to why you assumed I hadn't.

A suggestion or a theory can just as easily be made meaningless if it included silly assumptions. Yours did.

sebster
05-09-2007, 05:20
No it wasn't. Those costs are real costs, whether 'exceptional' or not. Don't let accounting lingo fool you.

Going forward, it might be profitable (and I expect it will be), but that was a fair old loss to make up.

The accounting lingo is highlighting a real and important distinction. There is a massive difference between recording a loss because you are undergoing a limited term expenditure on a special project and recording a loss due to trading activities. I'm guessing you're not an accountant, but I am, and I can tell you the final profit/loss figure is quite meaningless, the detail that goes into that figure is very important.

It also wasn't a fair old loss to make up. Not by any means. Not in terms of base revenue or capital investment.

Not that everything is rosey and bright in the world of GW. They've recorded their third consecutive year of sales decline, and that's a really serious issue for the company to address. But a small loss in a single year, due to expenditure on a special project? That's quite meaningless.

MutantMaggot
05-09-2007, 17:46
I read the whole thread. I'm quite puzzled as to why you assumed I hadn't.

A suggestion or a theory can just as easily be made meaningless if it included silly assumptions. Yours did.

*sighs*

I assumed it because I had already been grilled for assumptions, and admitted they were theories, not even facts, even saying yes, they were foolish. If you had read the thread, I thought you would have seen that the thread had moved on from my theories by now.

MutantMaggot

Wintermute
05-09-2007, 18:37
Desist with the flames or I will close the thread.

Wintermute
The WarSeer Inquisition

Mad Doc Grotsnik
05-09-2007, 18:44
No it wasn't. Those costs are real costs, whether 'exceptional' or not. Don't let accounting lingo fool you.

Going forward, it might be profitable (and I expect it will be), but that was a fair old loss to make up.

An exceptional cost is a one off cost, which had to made that financial year.

Before this was applied, GWs overheads had been covered by their turn over, which means they are, strictly speaking, still profitable organisation.

The Exceptional Cost was specifically to cover downsizing (redundancy, paying off Leases etc..) which will save them (apparently) £7,000,000 next year, giving them a much healthier (in theory) profit margin.

Mikhaila
06-09-2007, 06:47
One answer to the original question is "Not as bad as Rackham, obviously"

With Rackhams sales down by 25% at the moment, due to no one buying their metal models after the announcements about going to pre painted, they aren't making enough to pay bills, and are going into bankrupcy protection while they reorganize.

Bombot
06-09-2007, 07:57
An exceptional cost is a one off cost, which had to made that financial year.

A one off cost to avoid future some operating costs - they are just bringing them all forward.


Before this was applied, GWs overheads had been covered by their turn over, which means they are, strictly speaking, still profitable organisation.

But they are making that one-off cost to avoid going loss making in the following year. So pick your loss-making year: the one just gone or the current one. GW wisely went for the one just gone.

Costs are just labelled as exceptional to bring them to the reader's attention because of their unusual nature - they are not somehow 'not real'.

grickherder
06-09-2007, 10:24
One answer to the original question is "Not as bad as Rackham, obviously"

With Rackhams sales down by 25% at the moment, due to no one buying their metal models after the announcements about going to pre painted, they aren't making enough to pay bills, and are going into bankrupcy protection while they reorganize.

A prime example of not sticking with your core business and then devaluing your own product and alienating your existing customers by going in a direction that they don't want. I think if GW ever did prepainted plastics, they'd see a similar results.

I would have thought it would have been extra apparent with Rackham with their high end/high price sculpts in metal that such high ticket sculpts that are such a challenge to paint was their bread and butter. Why they'd alienate all those people and go for pre-paints is a bit shocking. I remember when the first white primered preview releases for AT-43 came out-- they had so much buzz. Then it came out that they'd be prepainted plastics. Their existing customers would have loved them in metal. AT-43 has done pretty well in the US and Canada, but I don't think it had the same appeal to their existing customer base in Europe.

And it is funny how it also reduced sales in their existing metals. Gamers really are fickle aren't they?

Bombot
06-09-2007, 10:44
The accounting lingo is highlighting a real and important distinction. There is a massive difference between recording a loss because you are undergoing a limited term expenditure on a special project and recording a loss due to trading activities. I'm guessing you're not an accountant, but I am, and I can tell you the final profit/loss figure is quite meaningless, the detail that goes into that figure is very important.

It also wasn't a fair old loss to make up. Not by any means. Not in terms of base revenue or capital investment.

Not that everything is rosey and bright in the world of GW. They've recorded their third consecutive year of sales decline, and that's a really serious issue for the company to address. But a small loss in a single year, due to expenditure on a special project? That's quite meaningless.

I am an accountant actually, hence why I know that the 'exceptional' loss is not some pen stroke that magically gives you back that that cash that will be spent on the reorganisation.

Yes, that's more cash that they won't be able to use as a dividend in the coming year - something of an issue for GW.

Although that reorganisation will save costs (and as I say, I do think is necessary), it will have a negative impact on revenue - they will less outlets selling their products.

Gazak Blacktoof
06-09-2007, 10:48
The speculation about down turn in existing product is that it is based on customer and stockist uncertainty about the new edition of confrontation, nothing to do with the release of at-43.

Mikhaila
06-09-2007, 14:23
AT-43 is the only thing keeping them afloat, and will probably get the lions share of their support budget. That just makes it worse for players/distributors/stores that have put money into their metal figures. Notice the half dozen distributors dumping Rackham metals at 50% to 75% off to the public, and I've gotten offers of up to 85% off to my store.

With the message being "lead is dead, prepainted is the future", it's not making anyone who was buying their metal very happy. They still have a chance, if there gamble to change to PPP pays off, they ride through this low spot in revenues, and can increase sales enough to get out of bankrupcy. The problems are:

1) No credit from their suppliers. You don't lend money to someone in bankrupcy, or ship them raw materials if they aren't paying the bills.

2) Uncertainty at the retail level. Stores wondering about buying into the AT-43 line may sit back and wait to see if they survive. No one wants a shelf full of games with no company backing them.

3) Uncertainty of customers. No one wants to buy a game that goes away and leaves you looking for people to play.

4) Distributors very leery about investing 10's or ever 100's of thousands of dollars to stock product that may go stale if the company goes away. Especially those distributors eating a ton of Rackham metal right now.

5) High costs involved in keeping the supply of PPP coming into the system. You can spin up a few dozen of a metal blister, you have to order PPP in huge runs, with shipping to you from China.

Watching what Rackham does is going to be interesting, and might give GW some hints about how the market is going. Certainly, if Rackham goes under, it's not a good sign, especially with Mongoose pausing in their PPP plans. If both of the main PPP manufacturers abandon it, no one else is going to be touching the idea for a long time. On the reverse track however, if both or even one of them emerge much stronger with increasing sales, you'll see more companies jump on the bandwagon.

sebster
06-09-2007, 16:06
I am an accountant actually, hence why I know that the 'exceptional' loss is not some pen stroke that magically gives you back that that cash that will be spent on the reorganisation.

Who said the money was being returned?


Yes, that's more cash that they won't be able to use as a dividend in the coming year - something of an issue for GW.

Yeah, its money spent, but as an accountant you should know money spent is gone and forgotten. What matters is expected future profits and cashflows. Past operating results are a strong indicator of future results, while past exceptional items are not. This is an important, and basic idea in reporting company performance, and as an accountant you will know this and so I really have no idea why you're arguing against it.