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Stock ended 15 points up today. Things may not be as bad as the doomsayers would like.
The letter read like standard corporate speak. I had a chance to fix it. I didn't but lets look at the good things I did. Basically don't burn your stock notes just yet...

 lobbywatson wrote:
Stock ended 15 points up today. Things may not be as bad as the doomsayers would like.
The letter read like standard corporate speak. I had a chance to fix it. I didn't but lets look at the good things I did. Basically don't burn your stock notes just yet...

The 15 point jump was probably due to Kirby leaving his position as CEO.

 lobbywatson wrote:

The letter read like standard corporate speak. I had a chance to fix it. I didn't but lets look at the good things I did. Basically don't burn your stock notes just yet...

It read like the diary of a mad man. He even said that he hired people for attitude over ability and that he's proud of it. How would you feel knowing that your electrician or plumber was hired for their attitude and not ability?
That's not something to be proud of. That's saying you kept inept people employed simply because you liked having conversation with them. This all comes out after you've been juggling the company's money on frivolous lawsuits, poor spending on the website redesign, and cost cutting measures.

The rant at the end about how "3-D printers will never be a thing. Look it up. If it was a thing, we would be selling Citadel printers. If it ever becomes a thing, and it won't, then we will jump on last minute to make money off it."
I'm expecting a limited edition special tutorial series on painting to be released on the website, available only on the highest quality of VHS.

The key sentence is the first one saying the results are going to be bad but he has been planning for the longer term.

The thing is nothing in the rest of it tells us why things are going to get better.

 lobbywatson wrote:
Stock ended 15 points up today. Things may not be as bad as the doomsayers would like.

Are these two sentences related?

The share price of a company shows nothing except what price people want to buy and sell the shares at.

 Kilkrazy wrote:
The share price of a company shows nothing except what price people want to buy and sell the shares at.

That's what I was getting at.

I remember a BOLS article a little while back that theorized on how WD sales must be really good since the share prices had been slowly recovering after the HY report.

Good times.

 Kilkrazy wrote:
The share price of a company shows nothing except what price people want to buy and sell the shares at.

Not really that true. Shares represent actual money input into the company from external sources. It's a pretty good indicator of a company's percieved health by the market, as it literally represents investors (usually companies) saying "we've seen you doing well, we think we can make money off your dividends". Selling is a big part of the stock market, but as far as I'm aware, GW isn't really a company you'd attempt to day trade, so their shares tend to mean how much people are willing to put in rather than a gamble on return from raising prices.

Eyjio wrote:

 Kilkrazy wrote:
The share price of a company shows nothing except what price people want to buy and sell the shares at.

Not really that true. Shares represent actual money input into the company from external sources.

Only the IPO represents actual money put into the company (or the sale of any centrally held shares, though this is uncommon). After the IPO, money paid for shares doesn't go to the company.

Barfolomew wrote:
You guys should probably go look at this thread in the Dakka Discussions forum:

http://www.dakkadakka.com/dakkaforum/posts/list/607499.page

Kirby stepping down letter.

Well then, um . . . ouch.

Eyjio wrote:

 Kilkrazy wrote:
The share price of a company shows nothing except what price people want to buy and sell the shares at.

Not really that true. Shares represent actual money input into the company from external sources. It's a pretty good indicator of a company's percieved health by the market, as it literally represents investors (usually companies) saying "we've seen you doing well, we think we can make money off your dividends". Selling is a big part of the stock market, but as far as I'm aware, GW isn't really a company you'd attempt to day trade, so their shares tend to mean how much people are willing to put in rather than a gamble on return from raising prices.

Other inaccuracies in what you're saying have already been addressed, but to take some thing else you've said, GW might not be a "day trade" type company, but one can clearly see that their price has spiked at some very predictable times, namely just prior to the qualification date for a dividend, with a steady decline after the dividend payment date, and then another small blip today, presumably from people grabbing some stock prior to tomorrow's report in the hope that it is positive and the price spikes again.

So I'd suggest that GW stock is being bought speculatively to a degree, if not exactly day traded.

Back on to the topic, the evidence is that the 11% fall in revenue between June 2013 and Dec 2013 caused a 26% drop in profits. That is because a large amount of GW's costs are fixed and cannot be reduced quickly. Even if GW sack staff and close shops, it damages their ability to market the game, so it is a desperation measure.

This "preamble" opens with a statement that can only be understood as meaning that the end of year figures are bad, so the trend of the first half has continued.

If this trend continued in 2014-2015 we might see the profit entirely eliminated. If continued the next year -- 2015-2016 -- GW would be in real trouble, making losses that they would have to spend their cash or take loans to defray. Once loss-making it becomes a lot harder to change things because you need to spend money to do so.

Kirby isn't going until half-way through 2014-2015. He will have a big influence on his successor because the current board will choose the new CEO. Kirby's "kronies" konstitute the board. Kirby will remain as chairman with considerable influence though no direct executive power.

Even if a revolutionary manages to sneak into GW he/she is unlikely to be able to make a big difference until the Kirby plan will have been shown to the GW board to be completely useless. That is unlikely to happen for a couple more years. It might by then be too late to turn things around.


Automatically Appended Next Post:
To clarify my position, I had thought that the release of 7th edition would pull GW's nuts out of the fire. This dismal preamble makes me think that it didn't.

If that is the case, GW will be seen to have had a bad year even when releasing Space Marines and new 40K rules, that huge numbers of people could have been expected to buy but did not.

That looks like very bad news.

Report is out. Death spiral velocity has indeed increased.

Also, stock opened down by 21.

jamesk1973 wrote:
Report is out. Death spiral velocity has indeed increased.

Link?

You can find the link at http://investor.games-workshop.com/2014/07/29/annual-report-2013-14/

 HiveFleetPlastic wrote:
You can find the link at http://investor.games-workshop.com/2014/07/29/annual-report-2013-14/

The strategic report is quite interesting.
They make no demographic research. But this is what companies generally use to their benefit.

Thats some brutal numbers.
I'd better stop buying 40k models, soon there won't be any game left to play...

 Thairne wrote:
Thats some brutal numbers.
I'd better stop buying 40k models, soon there won't be any game left to play...

Brother, I wouldn't be worried too much. Business will go on for a while.
We here stepped into WM/H being a decent alternative.

I don't know gak about economics or money.

Can someone summarize the important parts of the report, in laymen's terms?

It seems as though GW is determined to press on and find new customers, while doing no research on how to do that. They seem to think that if they can open enough stores in enough new places, they will sell more models because people really enjoy buying their models.

 wuestenfux wrote:

 Thairne wrote:
Thats some brutal numbers.
I'd better stop buying 40k models, soon there won't be any game left to play...

Brother, I wouldn't be worried too much. Business will go on for a while.
We here stepped into WM/H being a decent alternative.

True, but I love my 40k dearly... I seriously dig the fluff and the models and it is a sad day to see such a strong IP get run to the ground SO badly.
I don't WANT to switch to another system, but I feel it's better to cope with my "losses" and move on sooner than later.
Now if only I can bring myself to do this... *hrrngh*

The ignorance in the report is astounding. Sales drop by huge margins from year to year with new products coming out, and their only answer is "OPEN MOAR STORES!"
How ignorant does one have to be?

I duno man, I'm already considering just saying screw it and playing 5th edition with my models. My gaming community around town is smaller than ever and the only people that want to keep up with all the rules don't even bother painting the armies. They just have 3 squads of every new release undercoated within seconds of release.

This would be great for GW if there were many people doing that, but in my area its more like 3 or 4 people. I showed up at one store for open game night, only to find everyone playing warmachine.

At this point, I'd rather finish up 3 or 4 1-2k armies, and play casually with some friends. 3rd, 4th, or 5th edition seem so much easier to play with newbies anyway.

Point being, I can still enjoy the hobby without GW's survival.

Well, another way to look at it is that the death of Games Workshop isn't the death of 40K.

That's partially why I kind of want GW to tank, honestly. Even if they go, the chances are good that another company is going to either absorb GW or at least scoop up 40K, because any smart business can see the value in the IP. 40K was the premiere, leading brand of Wargaming for a long time, and has a built-in, loyal fanbase despite GW's treatment of them. There is a lot of potential to turn that IP into something much bigger, with the right business practices, and a smart company will know that.

So the death of Games Workshop could be the birth of 40K getting the care it deserves.

Not to get all doom and gloomy in here. I think GW has at least another half-decade or so of life left in it- but if it doesn't make radical changes to its business model, to emphasize customer growth rather than merely expense reductions, it won't have a chance.

Yeah, problem is I have a total of 3 people to play with.
One is getting more into FoW, the next is TFG that starts singing dirges for your troops when you loose and fields Wraith Knights against guys which just have no clue and basic troops (I kid you not, never saw such a bad looser/winner) which leaves one dude.
Maybe I can get some 1 or 2 people more I see play every week or other, but 40k is pretty deadish here already. If GW dies I have litteraly no hope of finding a game ever.

I'm close to finishing (paint-wise) my first DW army, had plans for a RW/Gerantius and was thinking of branching out into another codex afterswards (Crons or Nids).

But with this numbers and attitude shown in the report... Mind you, I only have some basic knowledge of business, but dropping from 25kk profit to 12kk with another 8% loss in sales yet again and a stubborn management that doesn't get whats wrong with their company puts this in great peril.

I thought about this as well. 40k is just a really strong IP as you said. It's a straw to grasp, but one I am willing to hold on to for a while longer. Let's hope all turns out good in the end.. for in the grim darkness of the near future, there must be 40k.

 BlaxicanX wrote:
I don't know gak about economics or money.

Can someone summarize the important parts of the report, in laymen's terms?

It will take some time to read through everything and make a good evaluation.

The headline item, though, is that sales are down 7% compared to last year, which is the worst performance since 2005-6.

The worry about this is that they relaunched Space Marines, Imperial Guard, Tyranids and 40K core rules, plus Imperial Knight Titans, Stormtroopers and various other stuff (Dark Angles), and still posted these bad numbers. So there is a feeling they have shot off a lot of their ammunition and missed the market, and what can they do next year?

There are some positive things:

They are still in profit.
They have a lot of money in the bank.

There is no immediate danger of them going out of business, and realistically it would take two or three years of continuing decline.

IMO the most important thing is that sales did decline again, which should silence the "but it was only a temporary drop" crowd. This pretty clearly confirms that GW's problems are real and not just a bunch of "haters" posting the same rants for the past 20 years. And what's worrying about this is that GW doesn't seem to have any plan for reversing the trend, which makes "2-3 years of decline" look more like an inevitable outcome than a worst-case scenario.

 Peregrine wrote:
IMO the most important thing is that sales did decline again, which should silence the "but it was only a temporary drop" crowd. This pretty clearly confirms that GW's problems are real and not just a bunch of "haters" posting the same rants for the past 20 years. And what's worrying about this is that GW doesn't seem to have any plan for reversing the trend, which makes "2-3 years of decline" look more like an inevitable outcome than a worst-case scenario.

The did have a plan. They enacted it and it clearly failed.
Honestly, I wonder how bad the numbers would have been without 7th Ed, Codex: Space Marine, Imperial Knights and IG the staff cutting.

Hopefully this will show them that they can't just keep cutting costs without doing something to increase revenue. Their magic plan to increase revenue is just to raise prices, making some people spend the same amount and just get less models, and making other people quit. It's not as bad as a lot of people thought it would be, but they need to do something about it soon.

 Peregrine wrote:
IMO the most important thing is that sales did decline again, which should silence the "but it was only a temporary drop" crowd. This pretty clearly confirms that GW's problems are real and not just a bunch of "haters" posting the same rants for the past 20 years. And what's worrying about this is that GW doesn't seem to have any plan for reversing the trend, which makes "2-3 years of decline" look more like an inevitable outcome than a worst-case scenario.

I'm glad sales declined primarily so we have something to throw in the face of "they keep doing it because people keep buying it" crowd