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I heard in the news that Games workshop stock took a hit... I'm looking for investment information in Games Workshop stock. GAW.L on the London Stock Exchange. Thanks for any information folks can give me.

I doubt this belongs here with the "News & Rumours" section matey.

I don't think GW stock is worth investing in. Haven't they been really stingy on dividends recently and they aren't doing all that well anyway. You may be interested in wargaming but don't put your money into it.

It really doesn't so off it goes...


...Shazam!

'Like many traded companies the value of GW's stocks and shares may go up or down.'

OP At the risk of stifling your development and learning I looked up this link for you. http://investor.games-workshop.com/

It may be useful.






As is this page:
http://investor.games-workshop.com/news/default.aspx

Hi all.
This may be useful too.

RNS Number : 9132Y

Games Workshop Group PLC

05 January 2011

Games Workshop Group PLC

("Games Workshop" or the "Group")

TRADING STATEMENT AND NOTICE OF RESULTS

For immediate release 5 January 2011

Games Workshop announces that pre-tax profits in respect of the year to 29 May 2011 are likely to be below current market expectations.

Sales were down 4% in the first half to 28 November 2010. Difficult trading conditions since that time mean that this shortfall is unlikely to be recovered by the year end. The Group's gross margin and costs remain under firm control and cash generation remains healthy. In addition, the outlook for royalties receivable in the current year remains good, although not as significant as in the year to 30 May 2010.

The Board of Games Workshop currently believes that, as a result of reduced volumes, pre-tax profits in respect of the year ending 29 May 2011 are unlikely to meet current market consensus estimates.

The Board will announce the Group's half-yearly results for the six months to 28 November 2010 on 25 January 2011.


TTFN

Thanks for the info...

Let me throw a few more questions at you guys.

Is GW stock majority owned by one person or investment firm?

What control does the board of GW have over ownership?

For the love god, don't invest real money in them. I bought £100k of FANASTY shares online in G.W stocks. (I know its only a game) but im down £23k since last weeks trainwreck of a slump.
Yes this means that right now G.W are cheaper than say two weeks ago (current price 330.00p as on close Friday, i paid 430.00p). But they will be going up for a long time if at all.
This chart will show what i mean, http://uk.finance.yahoo.com/echarts?s=GAW.L#symbol=gaw.l;range=ytd;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

If you are really looking into investing make it gold or sliver or even oil. Its going to be $100 a barrel very very soon.

Oh there are other better investments out there for sure, and I have a decently managed portfolio. My main interest would be developing a strong ownership presence to influence decision making.

My prediction is that company is poorly managed, and has made countless blunders as of late which will soon alert stock holders and lead to a corporate shake up. I'd like to be on the ground floor when this happens.

Of course after a drop like that and 6mth firgure being announced at the end of the month it could well be worth a punt [with your money that is not mine ] if they announce something slightly better than the latest warning.


Automatically Appended Next Post:

MisterMoon wrote:Oh there are other better investments out there for sure, and I have a decently managed portfolio. My main interest would be developing a strong ownership presence to influence decision making.

My prediction is that company is poorly managed, and has made countless blunders as of late which will soon alert stock holders and lead to a corporate shake up. I'd like to be on the ground floor when this happens.

On the contary I would suggest that they are well managed fiscally [though my gamers head would suggest that they do not necessarily do the best for gamers]. They have been growing over the long term and have a sensible approach to expansion in that they are about small sustained growth and not short term profits. The MD has even gone so far as to warn off investors that are looking for short term profits in the last report.

The last time I looked the majority of stock in GW was held by a number of pension companies but this could have changed.

GW seem to be weathering the current recession quite well, if I had spare funds then I would probably get some GW stock on the basis of the recent drop [betting on a reverse for the 25th Jan] but then i'm silly like that. In reality if you have a mortgage then you will always be better served putting all of your money on that.

MisterMoon wrote:Oh there are other better investments out there for sure, and I have a decently managed portfolio. My main interest would be developing a strong ownership presence to influence decision making.

My prediction is that company is poorly managed, and has made countless blunders as of late which will soon alert stock holders and lead to a corporate shake up. I'd like to be on the ground floor when this happens.

I don't think that what a investor does. Or more to the point a stock holder does. You would need to be on the board to make decisions of the running of a company.
Investing a £100k would get you a polite invite the share holders meeting in Nottingham in May and they will tell you alot of hot air and nice large numbers but thats it.
Invest a few million you might get a better response or you might get investigaed for inside dealing depending how the market goes in the next few weeks. If you are really looking to get in on the 'influence decision making' then now is the best time in the past year to buy up some shares. What the hell buy 51% of the share on the market and then you got some real power.
That would cost you alot of money!

But if i was you i would really look at my example, Ive lost £23k on just GW shares from the start of the year. O.k its fanasty shares. But if that had been out of my real money then i would be in some deep gak now. The stock market is on a tilt right now. Im not joking at all. Since the 2008 crash the markets around the world have just kept climbing but its a bubble and its going to burst. I don't know when, but the markets are inline for a big adjustment and if its too big then that can causes a panic sell and bingo you have a stock market crash and everyone loses. These are intresting times but if you really look into wants happening and what can happen if even the slightest thing goes wrong then you would be wise to avoid the stock markets and invest in real assests. Land, oil, gold and sliver. These are going to bring really wealth not investing in a failing toy company.

Not being funny but i really doubt you have the money to buy alot of shares coz if you did you would know this stuff already and would not be asking for stock market tips on a gaming forum....

notprop wrote:Of course after a drop like that and 6mth firgure being announced at the end of the month it could well be worth a punt [with your money that is not mine ] if they announce something slightly better than the latest warning.


Automatically Appended Next Post:

MisterMoon wrote:Oh there are other better investments out there for sure, and I have a decently managed portfolio. My main interest would be developing a strong ownership presence to influence decision making.

My prediction is that company is poorly managed, and has made countless blunders as of late which will soon alert stock holders and lead to a corporate shake up. I'd like to be on the ground floor when this happens.

On the contary I would suggest that they are well managed fiscally [though my gamers head would suggest that they do not necessarily do the best for gamers]. They have been growing over the long term and have a sensible approach to expansion in that they are about small sustained growth and not short term profits. The MD has even gone so far as to warn off investors that are looking for short term profits in the last report.

The last time I looked the majority of stock in GW was held by a number of pension companies but this could have changed.

GW seem to be weathering the current recession quite well, if I had spare funds then I would probably get some GW stock on the basis of the recent drop [betting on a reverse for the 25th Jan] but then i'm silly like that. In reality if you have a mortgage then you will always be better served putting all of your money on that.

From a product and capital handling stand point they've made very interesting blunders.

They invested heavily into capital with retail stores in the US, and closed many of them. They also have no interest in retail stores in some areas of the country including my own area of ATL.
Their release of 8th edition of fantasy also was released oddly. It's now nearly flopped.
Ultramarines movie was handled poorly and flopped. The 40k universe is too rich to not be a big hit on the screen if done right.
The mistakes with LOTR you could write a book about.

Does anyone else think if these things were done differently GW would be doing even better?

notprop wrote:Not being funny but i really doubt you have the money to buy alot of shares coz if you did you would know this stuff already and would not be asking for stock market tips on a gaming forum....

Not being funny either, and I appreciate the criticism. I'm sound enough financially to make an initial move, but no, I'm not wealthy enough to buy 51% of all shares. However, I've invested well and made good money doing it. My ideas as they have to do with GW would first be to buy stock, which I've already done- it just took a hit, and will likely recover, as will the "fantasy buy" the other poster made. It would take years and years to get where I'd want to be with this investment, and it's doubtful I'd be able to do it alone- if at all. However, Columbus didn't make it anywhere sitting on his butt.
Basically, I'm trying to scope it all out. Message boards are great place to get information on the ground level. As for your criticism, I can give you a bit of advice, if you think there is any ONE place that is GREAT or BAD to get investment advice, you will fail at investing. You do broad homework, posting on a board isn't the only thing to do, but it's not a bad idea to see what folks think, like I said, at the ground level.


In short it's not that GW isn't healthy, but what could it do without what seems to be poor strategic planning interests me somewhat.

I'm not trying to get into investment conversations, as I barely trust a bank with my money. I just wanted to comment on a few things.

There seems to be alot of talk about the Buisness strategies of Games Workshop. While we veteran gamers see these decisions as poorly thought, Games Workshop is doing one thing right and thats getting more people introduced to the game, if even for a short period. A kid who played 40k or Fantasy for a year or two would be more likely to see a film or read a novel about the respective universes, like was the case with transformers and GI Joe. There are always going to be children and teens to introduce the game to, and if one individual paints 5 Space Marines but goes to see a movie about them later on in life it's still going to generate profit. As far as this goes, I don't see games workshop losing their long term foothold on the market. It might take time, but you're more than likely going to have a sound investment.*

Have you thought of trying to rally for more gamers to take interest in this company? That way, more of us would invest money into the stock and eventually gain a voice in their decisions? (Seems like this only works in movies, I don"T claim to be an expert on this stuff.)


*Spend your money how you desire, I'm not trying to push you to spend more money on Games Workshop stuff.

brother_zach wrote:I'm not trying to get into investment conversations, as I barely trust a bank with my money. I just wanted to comment on a few things.

There seems to be alot of talk about the Buisness strategies of Games Workshop. While we veteran gamers see these decisions as poorly thought, Games Workshop is doing one thing right and thats getting more people introduced to the game, if even for a short period. A kid who played 40k or Fantasy for a year or two would be more likely to see a film or read a novel about the respective universes, like was the case with transformers and GI Joe. There are always going to be children and teens to introduce the game to, and if one individual paints 5 Space Marines but goes to see a movie about them later on in life it's still going to generate profit. As far as this goes, I don't see games workshop losing their long term foothold on the market. It might take time, but you're more than likely going to have a sound investment.*

Have you thought of trying to rally for more gamers to take interest in this company? That way, more of us would invest money into the stock and eventually gain a voice in their decisions? (Seems like this only works in movies, I don"T claim to be an expert on this stuff.)


*Spend your money how you desire, I'm not trying to push you to spend more money on Games Workshop stuff.

This might be sliding off topic, but I'm not so sure they are getting first time gamers like they used to. Generally speaking a first time GW gamer is mid-late teens to early to mid 20s. They aren't coming in like they used to. For one with Warhammer fantasy it takes over a 1000$ investment to play, which includes a 100 dollar rule book. That's preposterous. It's not as bad with 40k, and it does much better, but it's wrought with other strange business decisions, long periods between codex update, not making models for units which are in the book (it took us over a year to get the land speeder storm for instance.) But even with 40k, you need hundreds of dollars of investment to play. Especially with a new rulebook for fantasy, profits for fantasy have plummeted. What?! A new rule set is supposed to spike sales and interest in a system, not the other way around! So I'd venture to say they failed with getting new gamers with fantasy for that very reason alone.

Also it seems that GW is targeting even younger games, like 12-16 year olds. I'm fine with saying that I didn't have a real understanding of gaming rules for WH, 40k, DnD, etc until I was out of my teens. Sure I'd play anyways and had fun, but I would be hopelessly lost if I tried to throw dice (outside simple board games) pre-14 years old. I have no problem admitting that.

Here's something someone told me about why you don't want to market table top to younger folks. Do you play with toy soldiers currently? I had to say yes. Did you play with toy soldiers when you were a kid? I also said yes. Did you play with GI Joes as a kid? I said yes. Do you play with GI Joes now? and I do not. So if you play Warhammer when you are still a kid, you'll associate it with something you did as a kid, and move away from it as you get older.

MisterMoon wrote:

brother_zach wrote:I'm not trying to get into investment conversations, as I barely trust a bank with my money. I just wanted to comment on a few things.

There seems to be alot of talk about the Buisness strategies of Games Workshop. While we veteran gamers see these decisions as poorly thought, Games Workshop is doing one thing right and thats getting more people introduced to the game, if even for a short period. A kid who played 40k or Fantasy for a year or two would be more likely to see a film or read a novel about the respective universes, like was the case with transformers and GI Joe. There are always going to be children and teens to introduce the game to, and if one individual paints 5 Space Marines but goes to see a movie about them later on in life it's still going to generate profit. As far as this goes, I don't see games workshop losing their long term foothold on the market. It might take time, but you're more than likely going to have a sound investment.*

Have you thought of trying to rally for more gamers to take interest in this company? That way, more of us would invest money into the stock and eventually gain a voice in their decisions? (Seems like this only works in movies, I don"T claim to be an expert on this stuff.)


*Spend your money how you desire, I'm not trying to push you to spend more money on Games Workshop stuff.

This might be sliding off topic, but I'm not so sure they are getting first time gamers like they used to. Generally speaking a first time GW gamer is mid-late teens to early to mid 20s. They aren't coming in like they used to. For one with Warhammer fantasy it takes over a 1000$ investment to play, which includes a 100 dollar rule book. That's preposterous. It's not as bad with 40k, and it does much better, but it's wrought with other strange business decisions, long periods between codex update, not making models for units which are in the book (it took us over a year to get the land speeder storm for instance.) But even with 40k, you need hundreds of dollars of investment to play. Especially with a new rulebook for fantasy, profits for fantasy have plummeted. What?! A new rule set is supposed to spike sales and interest in a system, not the other way around! So I'd venture to say they failed with getting new gamers with fantasy for that very reason alone.

Also it seems that GW is targeting even younger games, like 12-16 year olds. I'm fine with saying that I didn't have a real understanding of gaming rules for WH, 40k, DnD, etc until I was out of my teens. Sure I'd play anyways and had fun, but I would be hopelessly lost if I tried to throw dice (outside simple board games) pre-14 years old. I have no problem admitting that.

Here's something someone told me about why you don't want to market table top to younger folks. Do you play with toy soldiers currently? I had to say yes. Did you play with toy soldiers when you were a kid? I also said yes. Did you play with GI Joes as a kid? I said yes. Do you play with GI Joes now? and I do not. So if you play Warhammer when you are still a kid, you'll associate it with something you did as a kid, and move away from it as you get older.

To each his own I suppose. Let me first start out by saying that the GW I used to frequent in Virginia was packed full of younger people interested in the game. I saw several parents walk in with their families with a genuine interest in allowing their children the game systems there while I saw many more pay for their child's mini's and supplies.

I believe that people who play board games will always have some sort of connection with them even when they stop playing them. Look at movies such as transformers and GI Joe, each one was based off a cartoon, and even older people who may have spopped watching the respective cartoons in the 80's went to go see the movies. As silly as it sounds, GW could effectively be creating "sleeper" customers who played the game for a little while, ditched it due to age/lack of funds/whatever, and continue to spend money on GW IP such as movies and video games. We call this nostalgia.(sp)

Just for a personal reference as well, I started this hobby when I was barely 12. By 13, I had learned third edition rules and could play a sucessful game(regardless if I won or lost). Some people just stick to what they can see improvement in. With the proper help of veterans and parents, there's no reason why a kid or teen should not continue to at least love and appreciate their hobby.

Just out of interest, what is your source for the assertion that Fantasy has tanked and sales have fallen? As far as I am aware, we haven't heard anything 'official' (and are unlikely to) but this is something that I have heard raised by several different people now.

Clearly as gamers, I think we can see that the fantasy release had some deep flaws, but I would be interested to see if there were evidence to back this up.

Hi filbert.
As GW do not make public any detailed sales figures, no one can prove how good WHFB 8th ed sales are.

However, previuos edition relases have resulted in incresed sales volumes. (And this doesnt appear to have happened.)

Also making the WHFB rellease ONLY suited to 'new players' , appears to have detered some vets from changing to the new edition.

EG
100 pages of rules and 400 paged of fluff and pictures for £50.
Or
100 page rule book ideal for vet players, bundeled with a lot of minatures , (they may not want,)for £55.

Where as , a 'rule book only' deal for vet players , for £15 to £20 would have been a good option.(IMO.)

But GW probably didnt want to eat into their other 'expencive' rule book sales.Given the chioce of 'buy our expencive options or continue with 7th ed/other rule set.'

Alot of WHFB players seem to have chosen the latter!

A quick look at the long term financial reports.
From 2000-2001 to 2010-2011.
Revenue incresed from £92.6 million pounds to £126.5 million pounds .(About the rate of inflation ,35% ish, over the same period.)

However in the same period of time GW increased retail prices 130% appx.

If revenue had increased at the same rate as thier retail price rises, they wouldhave achived a revenue of about £212 million.

Thats a short fall of about £86 million pounds, due to drop in sales volume (over 40 % drop) or a massive increase in inefficiency in the buisness.

TTFN

Thanks for the clarification Lanrak.

The reason I ask is that these sorts of threads rapidly devolve into a slanging match where the pro-GW viewpoint is 'you aren't a MD or CEO therefore your viewpoint is invalid and simply internet posturing', the inference being that the GW board, by very dint of their position, are the experts.

However, the material that you posted would seem to suggest that some quite fundamental marketing and production mistakes have and continue to be made, judging by the impact on sales, revenue and profit which is an interesting counter to the premise that the GW board is infallible.

MisterMoon wrote:

notprop wrote:Not being funny but i really doubt you have the money to buy alot of shares coz if you did you would know this stuff already and would not be asking for stock market tips on a gaming forum....

Not being funny either, and I appreciate the criticism. I'm sound enough financially to make an initial move, but no, I'm not wealthy enough to buy 51% of all shares. However, I've invested well and made good money doing it. My ideas as they have to do with GW would first be to buy stock, which I've already done- it just took a hit, and will likely recover, as will the "fantasy buy" the other poster made. It would take years and years to get where I'd want to be with this investment, and it's doubtful I'd be able to do it alone- if at all. However, Columbus didn't make it anywhere sitting on his butt.
Basically, I'm trying to scope it all out. Message boards are great place to get information on the ground level. As for your criticism, I can give you a bit of advice, if you think there is any ONE place that is GREAT or BAD to get investment advice, you will fail at investing. You do broad homework, posting on a board isn't the only thing to do, but it's not a bad idea to see what folks think, like I said, at the ground level.


In short it's not that GW isn't healthy, but what could it do without what seems to be poor strategic planning interests me somewhat.

You’re quite right it’s not funny, certainly not to misquote someone anyway, I believe that another member posted this gem please try to be a little more accurate in the future.

To address the points you raise:

You correctly identify GW’s moves into retail in the US. The problem here was that they used their [it would seem] relatively successful UK retail model that was also proven in foreign markets as and then spammed it out across the US as well which didn’t work so well. The point I would disagree with you on is that [form my understanding of the US operation] they have identified the problem, reduced their exposure and formed a new plan to expand the US market. As evidenced by MR Kirby’s presence in GWUS. You do need to remember that GW is a small British company and can not open a store in every US city at once, this also true of the UK where there are still many major towns that do not have a GW even after 20+ years.

Is 8th edition a flop? I have seen posts here praising the revisions to the WFB system with the only major grumble the lack of follow up Army books even though GW have addressed all existing books in FAQs. I took this to be the usual “I likz my army bestest and should have the bestest bookz!1!!” griping, but genuinely haven’t followed it too closely so could be wrong.

The Ultramarines movie was not a GW product (Codex Pictures) but was licensed by them. So even if this is a commercial flop for Codex [I’ve not yet seen any sales figures?], GW will still have received their fee.

As for the product itself I agree that it wasn’t ideal [why try to deal with Chaos when the first step would be to explain the Imperium?] but it was a decent enough first step that allowed GW to retain control of the IP. GW is known to have had a number of approaches from film makers over the years but have refused every overture because, like us they don’t want 40K “Hollywood style”.

Finally LOTR, commercially the only failure I can think of is that they did see that it would only have a big profile while the movies were screening or were assuming that the Hobbit movies would be made sooner. The game system itself seems relatively successful looking at its popular use of it throughout the Warhammer Historical imprint. I am of course assuming that since it still receives support as one of the 3 major GW systems it continues to be profitable. I would also guess that GWs continued support for LOTR over Epic as system #3 for example wouldn’t be a concern for investor with the forthcoming movies.

It would seem to me that you are suggesting that because GW has not sold the farm to Hollywood they are not managing the company well [sorry if this is the wrong inference BTW]. I believe this to be the wrong course and am happy that they are chasing sustainable growth over being I suspect a flash in the pan that would soon see them swallowed up by a Bandai or Mattel and Space Marine Happy Meals would be readily available. 

Hi notprop.
I dont want to upset you, but constantly increaseing retail prices over inflation , to make up for loss in sales volume, does NOT result in sustainlable growth.

I belive the 'price elasticity of GW customers' has finaly snapped!
And despite the increses in retail prices over inflation, GW can not make up the loss in sales volume, from customers leaving due to increased prices...

GW NEED to define what they are and what their primary buisness actualy is.
And when this is resolved create the buisness plan that is most apropriate.

The '... we are primarily a manufacturer of minatures... focused on expanding retail outlets... with the aim of selling the hobby...' statemnets to the shareholders, just sound confused and disjointed to me.

Most other companies in the table top minature games industry,seem to fall into 2 basic catogories...

Minature companies.They grow by delivering the best quality they can at the most competative price point...(some are happy to send free samples!)

Games companies.They grow by delivering the best game play they can.This grows thier gaming communty through word of mouth and generates interest in the other companies products.
(Like GW used to do)

TTFN

Lanrak wrote: I belive the 'price elasticity of GW customers' has finaly snapped!

I'm sorry, but this is simply not true. People have been saying this for years and years, ever since GW moved away from lead alloy, that this time it's too much, that this time gamers will abandon their addiction. It has never happened. Sure, the old might leave, but the young and the new coming in smooth out that infinitesimal blip on the graph.

http://www.bloomberg.com/apps/quote?ticker=GAW:LN

I don't understand all of that, but bottom line there are 31 million shares.

Each share costs 3.42 pounds.

So, to make an investment large enough to actually give you a voice in the company, we're talking millions of pounds.

And, if you're talking that kind of investment available to you, you're obviously going to have actual investment experts at your disposal and won't be posting on some internet message board.

I think GW is making a big mistake by:

- Continuing to waste money on their own retail stores
- Having no marketing what so ever. Even subscribing to their newsletter gets you almost nothing
- Very SLOW release schedule with both models and rules
- Continually raising prices despite the fact that plastic is supposed to be cheaper to produce and they've begun outsourcing
- Failing to take advantage of their great IP in other areas. Seriously, how do you get a Warhammer T-shirt? Why has there not been a Big Screen 40k movie?
- Being completely opposed to Fantasy/40k as a "competitive game". The fact that they've admitted they don't proof-read their rules very well is a joke. The future of miniature gaming is a tight rule set and tournament support.
- Their ridiculous price structure. Australians and Canadians pay 25% or more for miniatures than Americans do despite the exchange rate being nearly equal.

Lanrak I see what you are saying mate but don't agree, for reasons that Agee seems to have covered quite well.

In essence as long as GWs primary market remains 11-15 year olds with parents then they don't have to address the points that you raise bacause they are not relevent to the majority of their customers [or at least GWs target market].

Other companies whether game or miniature do not operate as GW does simply because of the scale that GW is operating on. Their success is based upon their retail presence drawing in new customers and dominating the word of mouth way that wargames get new players [and of course a good product of course].

Now my heart agrees with your sentiment (having got into 40k day 1 @ 11) but my head tells me that GW are making the right [unpopular] decisions when they need to.

@ Griever - GWs success and the fact that they are the biggest in this little hobby is based upon their dominating presence in retail areas in the UK and to a lesser extent Europe/US. Yes it is a big cost big it enables them to recruit new customers and continue to be the GW we all know. In the US you seem to have a much bigger number of independent store that sell GW product so their shops will look a little pointless to you but these are vital for GW to attract people to the products i.e the marketing which you would aspire to is the retail stores.

You can not release everything at once, you simply would not sell enough to make it worth while. Managed releases seem to work for them better.

Rising prices are a fact of life, there I said it. The material cost of a miniature is minor so any increase would be a blip even considering the volatile markets for the last 5 years. Most of the recent rise would I imagine be attributable to increased costs for staff (introduction of a minimum wage in the UK] and rents.

GW have many profitable licenses out at the moment, FFG, Computer games and Codex picture to name three [okay less so the last one ]. GW sells T-shirts, but why you would want to advertise a company that you have problems with is beyond me?

GW did get into organising campionships and the like but for all of the Gak that they got from rukes lawyers and TFG I can't blame them from taking a step back and saying it is all for fun. I think that the rules are pretty straight forward but many seem to game for advantage. The problem would appear to be from the players?

Oz/Canadia? That is a puzzler, they probably deserve it?

Agamemnon2 wrote:

Lanrak wrote: I belive the 'price elasticity of GW customers' has finaly snapped!

I'm sorry, but this is simply not true. People have been saying this for years and years, ever since GW moved away from lead alloy, that this time it's too much, that this time gamers will abandon their addiction. It has never happened. Sure, the old might leave, but the young and the new coming in smooth out that infinitesimal blip on the graph.

I agree and disagree.

There isn't one consumer with a single level of elasticity. There are several thousand customers all with varying elasticities and which will also change over time. So the concept that suddenly the company will plunge off a cliff and disappear overnight simply because of the elasticity effect is hyperbolic.

HOWEVER.

What is possible that as prices rises and as customer incomes don't rise with them (average UK earnings rose only 2.2% over the 12 months to November 2010), more and more customers will find that their individual elasticity has been over stretched - first they will by less and less, then they will find suddenly that they don't want to buy anything. The aggregate effect will not be sudden, but will be more gradual than that, as many customers will remain within their level of tolerance for price.

There is much evidence that this effect has already taken place, and is actually is in GW's past, not its future - the fact that for many years they have seen income from model sales decline in "real" and then latterly in "actual" terms would indicate that they are losing custom faster than they are gaining it - i.e. they are past the point of shrinkage rather than growth. Its not un-turn-around-able, but it is an obvious trend from their published sales figures from the last decade.

Over the last half-decade, GW has continually shrunk its cost base. It has sacked many staff from head office, and other central functions and recently from its retail team. How much further can this go on without GW sustaining losses? Shareholders can sustain profit "blips" (as happened in 2007 and 2008) if there is a clear plan of attack for the future (GW's involved getting Mark Wells in and booting Kirby out to the long grass in the US...) If the blip is more than temporary however, then ....

We are seeing "danger signs" in GW's ongoing reduction in models sales volume and retrenchtment of its activity base. At the moment they are still profitable so the shareholders are tolerant. The long term logical consequence of continued turnover reduction though is a trend to zero. Whatever GW have tried since 2005 has not reversed that trend. The logical implication is that price rises are recovering less income than they are putting off. If a 1% increase in sales price produces a 1.1% reduction in sales volume then we are now in a period of average price inelasticity for GW's customers. That may change if recovery comes to the UK, US and European economies, but right now, the indications are that GW lose more revenue than they gain from price rises, so to that extent, the EVIDENCE is that GW's customers on average are actually inelastic. In other words, for many of them "the elastic has snapped".

I would say that the Dark Eldar price levels indicate to me that the GW management may have spotted this, in that they offered better value for money than I would have expected given the price points on many other model ranges released in the past year. But I haven't done a scientific analysis of this as I can't be bothererd to trail through GW's horrible website getting comparative price information. I'd rather lurk on forums posting opinionated guff off the top of my head...