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Third Quarter Financial Report
Inzra
Member Posts: 679
www.funcom.com/funcom/frontend/files/CONTENT/Funcom_Q308_report_2912.pdf
www.funcom.com/funcom/frontend/files/CONTENT/Funcom_Q308_presentation_2912.pdf
I'm not much of an expert on this, but aren't they doing allright compared to doom and gloomers?
I don't see any bankruptcy yet?
Edit: wrong link
Comments
They certainly beat my expectations. But there are a couple little points that need to be made. They actually 'pushed' a significant portion of sales that occured in the second quarter into the third quarter (without announcing it in the 2nd quarter report). Boxes that sold in June in EU (2Q) were counted as sales in the 3Q report.
The last line also mentions the $6M error they made when reporting the 2nd quarter report. It's very hard to imagine that huge of an error not being noticed.
I'm also really perplexed as to how they ended the 2nd quarter with 34M in cash, then showed a -17M cashflow in the 3Q, and now show themselves having 36M in cash. Something really doesn't add up here, and I'm thinking they are going to have to announce another 'error' in their next quarters report.
The analysts are much better at this then I am, and they are selling the stock. Stock price has now reached an all time low $3.45 I think that 6M error they announced really has a lot of people spooked about what major error they will be announcing soon. My guess it is has something to do with that troublesome -17M cashflow number.
I agree. it is really interesting that they made a $6m error. My question is, did they take Q2 earnings and add them to Q3 to make Q3 look better than it actually was? ($6m error)
I agree. it is really interesting that they made a $6m error. My question is, did they take Q2 earnings and add them to Q3 to make Q3 look better than it actually was? ($6m error)
That is my guess. They could have done an amendment to the second quarter numbers(restated them) but that would have required them to file official paperwork. It looks like they just pushed that revenue (along with the June box sales) into the 3rd quarter.
It really makes no sense for them to preannounced 4th quarter revenue being only 9M when the 3rd quarter was at 18M, unless they know that about 6 to 8M of that 3Q number wasn't 'real'.
The stock is now down 20% on the day, which means others are smelling something fishy about these 'great' numbers released by Funcom.
Basically this report means funcom is profatable, and has enough money to make new games. Doomsayers /end.
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"Anyone posting on this forum is not an average user, and there for any opinions about the game are going to be overly critical compared to an average users opinions." - Me
"No, your wrong.." - Random user #123
"Hello person posting on a site specifically for MMO's in a thread on a sub forum specifically for a particular game talking about meta features and making comparisons to other titles in the genre, and their meta features.
How are you?" -Me
After the very strong launch period, the average
subscription period for Age of Conan has been
shorter than expected and this has led to a
reduction in subscriber levels in the period.
· The Company is proactively addressing the issues
with subscription longevity in Age of Conan and
expect this key value driver to improve significantly
in 2009.
-------------------
Translation:
The game is so so and they are trying to make it better.
Prognosis:
They screwed up by releasing game before it was done, people got fed up and won't be back. They won't get many new subs since everyone that was interested in playing a conan mmo, has already come and gone.
They need to take the stellar game engine they have and do a new game, but this time release it when it's feature complete.
AoC is in SWG mode now... It can linger for a long time but it will never be a big money maker for them as it would have if they had finished it before release. You usually get one shot with the average person then they are gone forever.
They definitely aren't going bankrupt, but I'd bet they aren't growing much.
-Viz
Basically they put the "lost" 6 millions inside the 3Q numbers, also there is this Korean launch agreement.
Btw, Funcom isn't only Age of Conan. AoC is only their "main car". And if you didn't take that in account, it is safe to say that AoC stayed with +-150k subscribers as base.
But even with positive numbers, Funcom stocks are still worthless and hardly will recover to the level before Age of Conan launch.
We will never know the truth about FC and their money income. All the proviously lies, hype and errors support this. I told you before this q3 report, the truth was not going to show completly. Thats just how FC do their business sadly.
a few interesting statements...
- their total amount of employees increased
- the Secret of the World team increased in size
-funcom is making huge profits compared to the time when AoC was in development
- their financial position is still solid
- they will not need external funding in 2009 :O
-dx10 for aoc is scheduled for Q4 2008, and the expansion pack is delayed till Q4 2009 (used to be Q1 2009 if i remember correct)
- no statements about the xbox 360 version of aoc.. nothing at all. im guessing they dropped it (i hope/think to focus on aoc for now)
well im glad that The Secret World is still progressing well, i like the setting of the game
MMOs currently playing: -
About to play: Lord of the Rings Online
Played: Anarchy Online (alltime favorite) and lots of f2p titles (honorable mentions: 9Dragons, Martial Heroes, Dekaron, Atlantica Online)
Sounds roughly like what wall street said about the economists warning of this now OBVIOUS catastrophe. Everything is fine, youre just doomsayers.
700 Billion dollar bailout and executives are going to pass out billions in bonuses this year to those directly repsoinsible for the collapse. Themselves.
Im surprised they can get away with missing 6 million and pushing q2 sales into q3 numbers. Look at the stock price today, how do you explain the stock at a new low? And if all you have to say is : the report today, obviously investors read it differently than you did?
Profitable. The report means that if they keep having 12 million expenses a quarter but do not get a boost like in this quarter from the sales of last quarter then they will not be profitable at all. Looking at the projected end of year result they will most likely report a loss in 2008.
So no, just like the shareholders i do not think these are good numbers and the fishy things going on with missing 6m and moving around sales is surely not going to instill trust.
From reading the report I agree with your points, but I can't make out why the stock was sold on the news? Either the market was expecting significantly better numbers or analysts feel the numbers are not accurate.
My guess is the market was just expecting better numbers. Perhaps something like analysts using average sub retention rates from other mmos as their assumption for their models of Funcom's earnings, and then being surprised to the downside by the average lifespan of an AoC sub.
How can subscription periods be short than expected and they are PROACTIVELY addressing the situation? Those two statements contradict each other.
Either they knew subscription longevity wasn't going to meet their expectations or they are REACTIVELY addressing the problems.
I hate corporate double talk.
History shows us that numbers and finances are easily manipulated.
Clearly, you don't "misplace" $6 million in a quarterly report. The stock/report system is innately flawed because any company is going to manipulate numbers to give the appearance of a sound investment product.
Chances are the most quarterly reports you read are misleading in a lot of ways and are not as optimistic as the accountants would have you believe.
If they report gloom and doom, who would buy or keep their stocks in that company.
Funcom quarterly reports don't mean much to me, good or bad. They have proven to be an unethical company and that is all I need to know to avoid their products and their stock.
Tecmo Bowl.
From reading the report I agree with your points, but I can't make out why the stock was sold on the news? Either the market was expecting significantly better numbers or analysts feel the numbers are not accurate.
My guess is the market was just expecting better numbers. Perhaps something like analysts using average sub retention rates from other mmos as their assumption for their models of Funcom's earnings, and then being surprised to the downside by the average lifespan of an AoC sub.
I think the analysts recognized the fishy accounting. The 6M is insanely vague? Where did it come from? Why wasn't the second quarter report restated to reflect it? Why was it added to the 3rd quarter instead?
Also, what is up with the cash flow? How can you end the 2nd quarter with 34M in cash. Then show -17M in cashflow, yet end the 3rd quarter with 36M in cash??
Why weren't the box sales from the 2nd quarter reflected in the second quarter report? Why push them to the third quarter?
This isn't a huge company like Enron, this is a small company probably only followed by a few analysts. I'm sure the ones who are following it are as bewildered as I am as to how Funcom just seemed to randomly throw together it's financial reports.
EBITDA is one of those financial terms whose myth I thought was exploded years ago. Didn't realize it was still used anywhere.
"Factoring out interest, taxes, depreciation and amortization can make even completely unprofitable firms appear to be fiscally healthy. A look back at the dotcoms provides countless examples of firms that had no hope, no future and certainly no earnings, but became the darlings of the investment world. The use of EBITDA as measure of financial health made these firms look attractive.
Likewise, EBITDA numbers are easy to manipulate. If fraudulent accounting techniques are used to inflate revenues and interest, taxes, depreciation and amortization are factored out of the equation, almost any company will look great. Of course, when the truth comes out about the sales figures, the house of cards will tumble and investors will be in trouble.
Operating cash flow is a better measure of how much cash a company is generating because it adds non-cash charges (depreciation and amortization) back to net income and includes the changes in working capital that also use/provide cash (such as changes in receivables, payables and inventories). These working capital factors are the key to determining how much cash a company is generating. If investors do not include changes in working capital in their analysis and rely solely on EBITDA, they will miss clues that indicate whether a company is losing money because it isn't making any sales." http://www.investopedia.com/articles/analyst/020602.asp
Then I look closer at the report and its says that earnings before tax is 2.158M USD the taxes are 605K USD, but the earnings AFTER tax is 2.763. Last time I checked tax is a minus to your bottom line, but they add it. Their real earnings after tax is 1.553M. Then they include profit from a discontinued product called Plutolife for 506k which would be 2.059M not the 3.27M they claim. Then I read "Funcom’s assessment is that it will be able to utilize the Company’s accumulated tax losses against future profits. The accumulated deferred tax asset is a result of an evaluation of tax losses and changes in temporary differences. All tax assets are denominated in primarily Swiss Franc and Norwegian kroner". This appears to say they have some tax deferred asset like a U.S. bond or T-Bill that they bought when the dollar was stronger vs the swiss franc or Norwegian Kroner and that apparently because of a weakened dollar the face value of those assets translate to being worth less in those currencies and apparently plan to write that off against future earnings giving the illusion of greater profits, which seems to be why they justify adding the tax instead of minussing it. All very suspect at best. Then their cash flow numbers, the only ones that really matter, are terrible. They have overall negative cash flow for the last 21 months. This company's got some trouble, but obviously your stock doesn't lose 93% of its value in 5 1/2 months because things are good so I guess we all knew that.
"The people never give up their liberties but under some delusion." -Edmund Burke
Who will rise up for me against the evildoers? or who will stand up for me against the workers of iniquity?"
(Psalm 94:16)
and you guys are surprised? every single company i work with in my job makes their report sound as rosey as possible.
Dell,Sun,Intel, AMD etc etc
thats not funcom or video games thats 99% of every company.
Ill bet if you met any of the people that put those reports together in a bar and introduced yourself as " Hi I'm (name here), Im with the SEC, they would fall off their barstools.
does not look like the investors thought the numbers looked all that great. Funcom stock closed @ 3.20 today down .80 for a 20% one day loss after the investors saw the report.
I miss DAoC
hmm... I may be bad at reading those financial reports, but if this thing includes their box sales, then I don't see how it could possibly be considered good at all.
They sold like 800 000 boxes, of which they get say $10, which gives us 8m for box sales. So if we remove that from their profit, they barely break even/
Now this was over August, September and November. We know August still had 415 000 subscribers, and most people seem to think that they currently have about 100 000 subscribers, which means about 230 000 average over the last quarter. Now even if they would manage to keep their current 100 000 (?) subscribers, they are still going to lose about 5 m each quarter, with no outlook on a change on that, until the secret world comes out.
This just seems really bad to me. I mean, this company has been working for 5 years on AoC, almost exclusively, and they don't seem to be able to make any profit from it at all, let alone be able to return the investment of those 5 years of development.
But anyway, I'd happily see them go down. The world will be a better place without that bunch of lying incompetent parasites burning money that isn't theirs. (I'm talking about FC management here, not all their employees).
From forums.f13.net/index.php
Quoted from Mrbloodworth:
So uh, my limited understanding of this is, they are making money, and doing just fine? Some one want to correct me? Some of that stuff i do not know what it means.
Reply by Shiznitz:
They are solidly profitable and have enough money in the bank to develop new games.
.... Atleast it was reworded so not outright plagiarism
I hope your spending as much time on political websites fighting the good fight about the bailout and major companies cooking the books. But probably not since that's nowhere near as important as a game launching with some missing features.
I hope your spending as much time on political websites fighting the good fight about the bailout and major companies cooking the books. But probably not since that's nowhere near as important as a game launching with some missing features.
See, that's the beauty of knowing what your limits are. My good friend obama is taking care of the world, and I make sure to do the funcom bashing.
This line made me shoot milk out my nose... thx a lot for that, lmao
"TO MICHAEL!"