Funcoms Financial Woes

bcrankshaw

Not sure if anyone has seen this

Doesnt surprise me

 

http://www.massively.com/2008/07/27/funcom-suffering-a-loss-of-investor-confidence/

hobo9766

I wonder what it would take to have funcom stripped of funding from the Norway government as they receive grants? I think they could be held liable in some way for enabling funcom considering the false advertising and lies about content written in print right on the game box itself.

Souldrainer

 
 Copy and paste the link from the OP to a firefox browser and you see the full chart. This is MUCH more telling than the 5-day thing we saw a few weeks ago, and much more accurate.

They have kind of a baseline thing going on until they did some PVP events and stuff in April, where the game spiked. AoC investors gained confidence from then until launch, where it boomed. After the boom, the game dropped to a level, but high, spot and stayed there.

It seemed stable, but there was a massive drop after June 16th. The June 12th Patch patch added content, but the June 16th Patch added bug fixes and not much more.

The most recent drop has been in the wake of Funcom sticking by their stealth-clothing and push for a T-rating, and their recent hiring of volunteers to moderate a forum that people pay to get access to. This drop is real, and it's lower than their drop caused by their delay back in August of 2007.

In conclusion, Funcom has been making some awful business decisions in the last 3-4 weeks which are crushing this game. The game has seen a steady decline with the content trickling since launch, but the nail in the coffin was the 1-2 punch of bad customer treatment and changing the IP that put the nail in the coffin.

This is sad. A month ago, I was one of the few fingers holding up the coffin lid. Now, I can't wait to see this game get buried. Age of "Conan" is not true to to the REH Conan IP, the customer service is terrible, and the updates are sparse. Long live CONAN. Die, Funcom, die.

 

IKShadow

So basically the stock value is almost the same (-0.5%) as it was prior to Conan release.



Since the launch of AoC, their stock has tumbled from $54 to $24 a share ...

On the flip side, it should be noted that the price of Funcom stock had been fairly steady, around $25, for several months prior to March of this year.





After reading all those doom posts one would think Funcom is in some huge financial troubles but it seems thats not really the case.



They sold lots of boxes way more then one would participate they would, collect lots of $ from subscriptions .. note lots and lots players subscribe for 3months or even 6 months.  ( sub does not mean that they play actively too, if you dont like the game you dont play it regardless if you payed for subs)

 

revelatorX

this was posted on the FC forum... pretty informative.

 

Actually they are doing quite badly. Here's why the 56% net profit margin does not tell the whole story. Now, firstly, I didn't go out and get a whole lot of information, I just google financed funcom...



here is the link http://finance.google.com/finance?q=OSL%3AFUNCOM



in the first quarter, which is the quarter you referenced, they turned a 56% net profit margin, but had an operating profit margin of -191%. That means cost of goods sold and operating expenses far exceeded revenue. Now, there are a couple "below line" items that are calculated in net profit margin, but not operating profit margin. Those would be interest income/expense, other income/expense, and gain/loss on the sale of an asset and things such as that.



I googled funcom financial news, just like that and clicked on the second link: http://www.gamedevelopment.com/php-b...hp?story=18616



it says that funcom had an EBIT loss of 3.3 million, that does not count interest expense and income tax expense, which are paid in quarterly estimated payments. However, funcom was able to turn a .9 million NET profit due to currency fluctuations and 'tax income'.



Now, the numbers we are quoting here are first quarter '08, and do not include the impact of the launch. We can see from the google page that the TTM profit margins (trailing twelve month) show that net profit margin is down to 49%, but the operating profit margin is UP to a dismal -139%. They are maintaining the inconsistency between margins by further adding below line gains.



By glancing at the only news article on that google page, you can see that funcom sold "Plutolife" one of its subsidiaries, for 3.7 million, in early July.



What this does is paint a rosy picture for investors, because the key figure for them is earnings per share. Earnings per share is nothing more than net income divided by the number of shares. Funcom has maintained positive earnings per share, through non-recurring means (once they have sold plutolife, they no longer have that asset to sell in the future). This is almost "artificial" earnings per share, and it obviously covers the fact that funcom, even after launch, is operating at a very large loss right now.



If you are invested in funcom stock, and all you pay attention to is the quarterly earnings figure, you don't have the whole picture. but I guarantee the investors and analysts that actually call into the quarterly earnings conference call are well aware of all of this.

Souldrainer

Originally posted by IKShadow


So basically the stock value is almost the same (-0.5%) as it was prior to Conan release.



Since the launch of AoC, their stock has tumbled from $54 to $24 a share ...

On the flip side, it should be noted that the price of Funcom stock had been fairly steady, around $25, for several months prior to March of this year.





After reading all those doom posts one would think Funcom is in some huge financial troubles but it seems thats not really the case.



They sold lots of boxes way more then one would participate they would, collect lots of $ from subscriptions .. note lots and lots players subscribe for 3months or even 6 months.  ( sub does not mean that they play actively too, if you dont like the game you dont play it regardless if you payed for subs)
 

 

Not quite.  It looks from the chart as if their stocks are slightly lower than they were before AoC launch.  I'm not a stock market expert.  Call me crazy, but I think having more sales before product existence vs. after is a bad thing.