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 agnosto wrote:

Backfire wrote:
They do not make any kind of on-hands analysis. They have some sort of simple algorithm to calculate 'probability of bankrupcy'. It does not appear to be very good. I bet nobody on Macroaxis has ever heard of Games Workshop.

Famously, year ago they predicted that Sony will go bankrupt on 79% probability.

Reading skills failure on your part then. From the website in question (emphasis mine):

The score is used to predict probability of a firm or a fund going into bankruptcy or experiencing financial distress within next 24 months.

Sony, did/is in fact experience(ing) financial distress.

No, they are not. 'Financial distress' as I and most people understand it, means that you can't meet your financial liabilities. Sure enough, Sony is not doing exactly great, but they have big reserves and huge cash flow. They may be forced to lay off people (already have), maybe sell off some poorly performing division, but there is very little risk for the whole corporation coming down.
Note that Sony's stock is higher than it was when said prediction was made: although the stock has come down big time from the top years ago, it has been relatively stable of late, which means that Sony's problems have already been priced in to the stock. Markets clearly do not believe Sony is going under anytime soon (ditto for GW). Markets nearly always outperform individual analysts, to say nothing about some mechanical algorithm.

Keep in mind that having people in the store is generally a good thing.

Backfire wrote:

 agnosto wrote:

Backfire wrote:
They do not make any kind of on-hands analysis. They have some sort of simple algorithm to calculate 'probability of bankrupcy'. It does not appear to be very good. I bet nobody on Macroaxis has ever heard of Games Workshop.

Famously, year ago they predicted that Sony will go bankrupt on 79% probability.

Reading skills failure on your part then. From the website in question (emphasis mine):

The score is used to predict probability of a firm or a fund going into bankruptcy or experiencing financial distress within next 24 months.

Sony, did/is in fact experience(ing) financial distress.

No, they are not. 'Financial distress' as I and most people understand it, means that you can't meet your financial liabilities. Sure enough, Sony is not doing exactly great, but they have big reserves and huge cash flow. They may be forced to lay off people (already have), maybe sell off some poorly performing division, but there is very little risk for the whole corporation coming down.
Note that Sony's stock is higher than it was when said prediction was made: although the stock has come down big time from the top years ago, it has been relatively stable of late, which means that Sony's problems have already been priced in to the stock. Markets clearly do not believe Sony is going under anytime soon (ditto for GW). Markets nearly always outperform individual analysts, to say nothing about some mechanical algorithm.

ROFLMAO. I missed the initial beck-and-forth on this.

So funny, Sony in financial distress. . Sony is market capped at $20+ billion, has a reasonable amount of cash and equivalents versus short term debts, and perhaps more importantly is a source of national pride for the Japanese. It's as likely to become insolvent as Samsung or General Motors. As proven, countries will come to the aid of national, ionic companies that are important to that country's financial strength, if push comes to shove.

It's just "G." We sold the "E" to Samsung. They're Samesung now.

I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

 Azreal13 wrote:
I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

Because cynical calous business reasons. If they KNOW they will receive a bailout, feth it take some serious risks. Same reason some companies will flagrantly break the law, apologize & pay the fines. If I make $100 billion manipulating toxic mortgages & the fed fines me $50 billion that's nothing. People will look and say "ohhh he got fined HARD $50 billion is a lot" meanwhile I'll just sit here counting the $50billion in profits I still kept.

 Azreal13 wrote:
I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

I never said that Sony needed a bailout though >.< They have plenty of cash. I was just making a point that Sony (just as Toyota, Honda, etc.) is an important company to the Japanese, and they will support it if the company needs help (whether by buying product, loaning money, etc.). Neither did I imply (or mean to imply) that Samsung was in any kind of distress (they're obviousy not).

Anyhow, financial distress means being unable to pay your creditors. This is clearly not the case for Sony. It's also clearly not the case for Games Workshop, as they have cash, are profitable, and continue to pay dividends. There's a huge difference between shrinking marketshare and/or declining business and financial distress, and insolvency.


Automatically Appended Next Post:

 Shas'O Dorian wrote:

 Azreal13 wrote:
I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

Because cynical calous business reasons. If they KNOW they will receive a bailout, feth it take some serious risks. Same reason some companies will flagrantly break the law, apologize & pay the fines. If I make $100 billion manipulating toxic mortgages & the fed fines me $50 billion that's nothing. People will look and say "ohhh he got fined HARD $50 billion is a lot" meanwhile I'll just sit here counting the $50billion in profits I still kept.

Yeah, this was the case with the ***hole bankers. What I can't believe is...

They got away with it, and everyone else paid for it.

Backfire wrote:

 agnosto wrote:

Backfire wrote:
They do not make any kind of on-hands analysis. They have some sort of simple algorithm to calculate 'probability of bankrupcy'. It does not appear to be very good. I bet nobody on Macroaxis has ever heard of Games Workshop.

Famously, year ago they predicted that Sony will go bankrupt on 79% probability.

Reading skills failure on your part then. From the website in question (emphasis mine):

The score is used to predict probability of a firm or a fund going into bankruptcy or experiencing financial distress within next 24 months.

Sony, did/is in fact experience(ing) financial distress.

No, they are not. 'Financial distress' as I and most people understand it, means that you can't meet your financial liabilities. Sure enough, Sony is not doing exactly great, but they have big reserves and huge cash flow. They may be forced to lay off people (already have), maybe sell off some poorly performing division, but there is very little risk for the whole corporation coming down.
Note that Sony's stock is higher than it was when said prediction was made: although the stock has come down big time from the top years ago, it has been relatively stable of late, which means that Sony's problems have already been priced in to the stock. Markets clearly do not believe Sony is going under anytime soon (ditto for GW). Markets nearly always outperform individual analysts, to say nothing about some mechanical algorithm.

So, unable to make payroll, maintain positions and cutting traditional bonuses (Japanese business practice which, the amount of which is included in the employee's annual compensation unlike most Western countries) doesn't mean they are experiencing distress? Interesting. Normally, being unable to meet financial obligations means there's some distress.

No one believes Sony is going out of business or shuttering sections of their business, but you can't hemorrhage billions and be considered to be in financial good health.

Meanwhile, in the real world, Sony has had declining liquidity for years, has posted losses for three out of the four last years, and has informed investors of a projected loss of $2.14bn at the end of the current financial year (31 March).

Financial distress does not mean that a company is unable to pay its creditors. Being unable to pay your creditors means you're bankrupt.

Talys wrote:

 Azreal13 wrote:
I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

I never said that Sony needed a bailout though >.< They have plenty of cash. I was just making a point that Sony (just as Toyota, Honda, etc.) is an important company to the Japanese, and they will support it if the company needs help (whether by buying product, loaning money, etc.). Neither did I imply (or mean to imply) that Samsung was in any kind of distress (they're obviousy not).

No, but you did mention GM in your post. The point I was making is that not being allowed to go bust by your govt doesn't preclude you getting into financial distress. Getting into financial distress doesn't mean you'll go bankrupt.

Besides, all this to and fro is WRT Sony entering financial distress sometime in the next two years (I believe?) on a prediction made one year ago, with a greater than one in five chance of it not happening?

Anyhow, financial distress means being unable to pay your creditors. This is clearly not the case for Sony. It's also clearly not the case for Games Workshop, as they have cash, are profitable, and continue to pay dividends. There's a huge difference between shrinking marketshare and/or declining business and financial distress, and insolvency.

GW are paying dividends at a rate perhaps higher than they should, have less cash than they did, and assuming linear progression, aren't very far from ceasing to make a profit. There may be a difference between shrinking market share and the other items, but it would be foolish to say that they're not related. It would also be foolish to say that shrinking market share can't very quickly lead to the other issues.

 Azreal13 wrote:

Talys wrote:

 Azreal13 wrote:
I'm sorry, but how does requiring a multi-billion government bail out not count as "financial distress?"

I mean, I wouldn't say "Oh sure, my heart just stopped and the only chance I've got of surviving is a transplant, but otherwise I'm fine" would I?

I never said that Sony needed a bailout though >.< They have plenty of cash. I was just making a point that Sony (just as Toyota, Honda, etc.) is an important company to the Japanese, and they will support it if the company needs help (whether by buying product, loaning money, etc.). Neither did I imply (or mean to imply) that Samsung was in any kind of distress (they're obviousy not).

No, but you did mention GM in your post. The point I was making is that not being allowed to go bust by your govt doesn't preclude you getting into financial distress. Getting into financial distress doesn't mean you'll go bankrupt.

Besides, all this to and fro is WRT Sony entering financial distress sometime in the next two years (I believe?) on a prediction made one year ago, with a greater than one in five chance of it not happening?

Anyhow, financial distress means being unable to pay your creditors. This is clearly not the case for Sony. It's also clearly not the case for Games Workshop, as they have cash, are profitable, and continue to pay dividends. There's a huge difference between shrinking marketshare and/or declining business and financial distress, and insolvency.

GW are paying dividends at a rate perhaps higher than they should, have less cash than they did, and assuming linear progression, aren't very far from ceasing to make a profit. There may be a difference between shrinking market share and the other items, but it would be foolish to say that they're not related. It would also be foolish to say that shrinking market share can't very quickly lead to the other issues.

Maybe GW hubris is so high, they think they're too big to fail.

I can't wait for the tell all book, economic analysis and pulp novel "too big too fail: plastic space man edition" that will be released following the supposed death of GW.


Automatically Appended Next Post:
Written by Matt Ward of course.

 Thud wrote:
Meanwhile, in the real world, Sony has had declining liquidity for years, has posted losses for three out of the four last years, and has informed investors of a projected loss of $2.14bn at the end of the current financial year (31 March).

Financial distress does not mean that a company is unable to pay its creditors. Being unable to pay your creditors means you're bankrupt.

You're wrong about the definition of financial distress and bankruptcy. I'm not trying to split hairs, but in the world of investments, definitions are important, and financial distress and bankruptcy just don't mean what you say. in lay terms financial distress is when a company can't pay its bills, and bankruptcy occurs is when a company's assets are divested to fulfill those obligations, per a court order sought by said creditors. Anotehr important term is bankruptcy protection (also known as Chapter 11 in the USA), which occurs when a company seeks court assistance to reorganize its debts under existing management.

Most often when a large company -- or small company -- can't pay its bills, its creditors say, "let's work it out", because when a company goes through bankruptcy proceedings, creditors get pennies on the dollar owed; in the other instance, at least, you have a liability that is worth a lot on paper, that may just take longer to repay.

As defined by InvestorWords:

Financial Distress - Definition

Tight cash situation in which a business, household, or individual cannot pay the owed amounts on the due date. If prolonged, this situation can force the owing entity into bankruptcy or forced liquidation. It is compounded by the fact that banks and other financial institutions refuse to lend to those in serious distress. When a firm is under financial distress, the situation frequently sharply reduces its market value, suppliers of goods and services usually insist on COD terms, and large customer may cancel their orders in anticipation of not getting deliveries on time.

http://www.investorwords.com/7302/financial_distress.html

Bankruptcy - Definition

A proceeding in a federal court in which an insolvent debtor's assets are liquidated and the debtor is relieved of further liability. Chapter 7 of the Bankruptcy Reform Act deals with liquidation, while Chapter 11 deals with reorganization.

http://www.investorwords.com/416/bankruptcy.html

 H.B.M.C. wrote:

 Fango wrote:
Since the lawsuit, we've seen a 'backlash' of sorts by GW to convert or drop all nebulous or non-copyright-able IP...a 'baring of the gates' or 'boarding up the windows' of sorts. Some of these knee-jerk decisions almost seem like they are punishing their fan-base..."See? See what you made us do?".

I call this the "Be careful what you wish for!" principle. Many times we've wanted GW to do something or for them to be jolted into action by some event, only for them to take the less consumer friendly road. Yes, they stopped doing the thing we wanted them to stop doing, but the replacement isn't better.

 Sean_OBrien wrote:
You know how most companies respond to growth in their competition? Leveraging their market position to maintain dominance...

This has been a consistent failure of GW for some number of years. Given how they use their license (everything from computer games to RPGs) it is astonishing how they have not used these avenues of attack (so to speak) to further enhance their own gains.

Where were the Dawn of War related releases when those games were coming out? Why wasn't there a Heroes of Kronus box with unique miniatures (accompanied by rules in WD) for the heroes in that game? What about DoW II? Why no cross-promotion with FFG for the RPG's? It can only help them to do so. The Ultramarine movie, as terrible as it turned out, got nothing. There was no miniature release to go with it. FFG did more with that release, putting out a brief 3-4 page set of rules for a relic and a few other things related to the movie, and it was free.

The problem lies in the fact that GW sees their licensed products not as an opportunity to spread their influence and brand but as something to sit back and collect money from. How else do you explain the scattershot way they recently gave out the 40K license to any two-bit mobile developer? A lot of money in licensing fees for no effort.

If they'd put it even a modicum of effort to leverage these outside releases over the past decade things could be very different.

Perfectly said there, my son loved Dawn of War and wanted Blood Ravens. When I told him I could paint the colours but there is no codex or book as he would understand he lost interest really fast in it. I could never understand why GW would not capitalize on it.

Only thing I could think of is GW didn't create Blood Ravens so couldn't use them. Maybe it's a good thing, it would have been really expensive buying all those Blood Ravens minis if they were available.

I can quote stuff too:

DEFINITION OF 'FINANCIAL DISTRESS'
A condition where a company cannot meet or has difficulty paying off its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns.

http://www.investopedia.com/terms/f/financial_distress.asp

DEFINITION OF 'BANKRUPTCY'
A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

http://www.investopedia.com/terms/b/bankruptcy.asp

Also, in the quote you provided for bankruptcy, it refers to an "insolvent debtor." What's that then? Glad you asked. It's someone who is unable to meet debt obligations. In other words; can't pay your creditors.

You're confusing a company being bankrupt and the ensuing bankruptcy proceedings which deal with said company's remaining assets and creditors.

If a company fails to pay its debts, it's bankrupt. If it finds a way around that (e.g., creditors saying "let's work it out," or more commonly taking on a longer term loan which it can (or hopes it can) handle to pay off immediate debts it otherwise would not be able to pay) it isn't failing to pay its debts. Quite the opposite, in fact.

http://www.investopedia.com/terms/f/financial_distress.asp

DEFINITION OF 'FINANCIAL DISTRESS'
A condition where a company cannot meet or has difficulty paying off its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns.

Trailing Twelve Months (TTM) ended in Sep. 2014:
Total Assets was $144,928 Mil.
Total Current Assets was $40,516 Mil.
Total Current Liabilities was $45,232 Mil.
Retained Earnings was $7,733 Mil.
Pretax Income was -837.369456285 + 669.949609506 + -1135.87062732 + 867.668664218 = $-436 Mil.
Interest Expense was -56.2900683915 + -62.8240036291 + -1740.63904632 + -2307.08486372 = $-4,167 Mil.
Revenue was 17700.7084897 + 17733.2605677 + 18235.7729138 + 23321.2739223 = $76,991 Mil.
Market Capitalization (Today) was $24,088 Mil.
Total Liabilities was $123,641 Mil.

I don't know what else to call it when your liabilities exceed your assets......They're eating through their savings at a prodigious rate (sound like another company we know?)

 agnosto wrote:
http://www.investopedia.com/terms/f/financial_distress.asp

DEFINITION OF 'FINANCIAL DISTRESS'
A condition where a company cannot meet or has difficulty paying off its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns.

Trailing Twelve Months (TTM) ended in Sep. 2014:
Total Assets was $144,928 Mil.
Total Current Assets was $40,516 Mil.
Total Current Liabilities was $45,232 Mil.
Retained Earnings was $7,733 Mil.
Pretax Income was -837.369456285 + 669.949609506 + -1135.87062732 + 867.668664218 = $-436 Mil.
Interest Expense was -56.2900683915 + -62.8240036291 + -1740.63904632 + -2307.08486372 = $-4,167 Mil.
Revenue was 17700.7084897 + 17733.2605677 + 18235.7729138 + 23321.2739223 = $76,991 Mil.
Market Capitalization (Today) was $24,088 Mil.
Total Liabilities was $123,641 Mil.

I don't know what else to call it when your liabilities exceed your assets......They're eating through their savings at a prodigious rate (sound like another company we know?)

*I changed the text color above to call out what I'm referencing below in my statement.

According to their audited financial results, their Net Assets (Total Assets - Total Liabilities) = 49,765. That would indicate their assets exceed their liabilities. In fact, their current assets exceed their current liabilities by almost double (aka current ratio aka liquidity ratio). This would indicate GW is very liquid because it has the ability to pay its obligations. In addition, it also has the ability to pay its commitments noted in Note 12 which are not identified in the financial statements. Refer to the balance sheet on page 5 and footnote 12 on page of the mid year financial statements.

Also, when did they acquire debt? I think I missed the memo and didn't see it as a subsequent event in their financial statements. I'm referencing this per your interest Expense calculation above. Interest expense should be broken out as a separate item on their P&L and its not listed. Its broken out so you can get a true picture of operations ie - EBITDA. EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. This provides the reader with a "true" sense of earnings from operations as the other expenses are not directly related to operations (interest is derived from debt, income taxes are based on earnings not operations, depreciation and amortization are based on capitalized assets in which cash may have been spent several years ago and in the current year are non-cash expenses). In addition, I don't see any LT debt or capital leases on the Company's Balance Sheet. How are they paying $4.2MM in interest charges?

When I look at the Company's health, I generally like to look at their statement of cash flows because it gives me a sense of what is happening with the Company. It shows what they are spending their money on and reconciles the change in cash between the periods (on an annual basis). GW is still a healthy company because they have the cash reserves and cash flow to maintain status quo. I'd like to see them take more action and I do participate in elections the Company's elections though I don't have enough skin in the game to matter when compared to the rest of the Investors. If you want to see GW change, buy their stock and create a block of investors and demand change. The only way anyone on this board can make it happen is by working within their system. Buy their shares and threaten a takeover, be that activist investor they don't like. Management won't take you seriously until you're sitting across the table from them and have support from their investors.

Thud wrote:I can quote stuff too:

DEFINITION OF 'FINANCIAL DISTRESS'
A condition where a company cannot meet or has difficulty paying off its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns.

http://www.investopedia.com/terms/f/financial_distress.asp

DEFINITION OF 'BANKRUPTCY'
A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

http://www.investopedia.com/terms/b/bankruptcy.asp

Also, in the quote you provided for bankruptcy, it refers to an "insolvent debtor." What's that then? Glad you asked. It's someone who is unable to meet debt obligations. In other words; can't pay your creditors.

You're confusing a company being bankrupt and the ensuing bankruptcy proceedings which deal with said company's remaining assets and creditors.

If a company fails to pay its debts, it's bankrupt. If it finds a way around that (e.g., creditors saying "let's work it out," or more commonly taking on a longer term loan which it can (or hopes it can) handle to pay off immediate debts it otherwise would not be able to pay) it isn't failing to pay its debts. Quite the opposite, in fact.

You've really made my point for me. A bankrupt company is an insolvent debtor. A company in financial distress is not at that point yet.

I've worked at or with many companies that can't pay its debts. You know what happens? A creditor, even the government tax branch calls, and says, "Pay up". The company says, "We can't. We'll try our best, though, and here's a little bit for now." The creditor grumbles, and eventually escalates from collections to legal proceedings. Through that whole process? That company is in "financial distress". They're not bankrupt.

A company isn't even bankrupt if it successfully files for bankruptcy protection under Chapter 11, and is approved for reorganization of its debts. In this case, the company most certainly can't pay its debts (that's why they're "reorganized"), but it's still not bankrupt. When Chapter 11 fails, and an agreement isn't accepted between creditors and the debtor, the company's assets are liquidated. This is a bankrupt company.

You said:

Thud wrote:Financial distress does not mean that a company is unable to pay its creditors. Being unable to pay your creditors means you're bankrupt.

Automatically Appended Next Post:

boyd wrote:

According to their audited financial results, their Net Assets (Total Assets - Total Liabilities) = 49,765. That would indicate their assets exceed their liabilities. In fact, their current assets exceed their current liabilities by almost double (aka current ratio aka liquidity ratio). This would indicate GW is very liquid because it has the ability to pay its obligations. In addition, it also has the ability to pay its commitments noted in Note 12 which are not identified in the financial statements. Refer to the balance sheet on page 5 and footnote 12 on page of the mid year financial statements.

Also, when did they acquire debt? I think I missed the memo and didn't see it as a subsequent event in their financial statements. I'm referencing this per your interest Expense calculation above. Interest expense should be broken out as a separate item on their P&L and its not listed. Its broken out so you can get a true picture of operations ie - EBITDA. EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. This provides the reader with a "true" sense of earnings from operations as the other expenses are not directly related to operations (interest is derived from debt, income taxes are based on earnings not operations, depreciation and amortization are based on capitalized assets in which cash may have been spent several years ago and in the current year are non-cash expenses). In addition, I don't see any LT debt or capital leases on the Company's Balance Sheet. How are they paying $4.2MM in interest charges?

When I look at the Company's health, I generally like to look at their statement of cash flows because it gives me a sense of what is happening with the Company. It shows what they are spending their money on and reconciles the change in cash between the periods (on an annual basis). GW is still a healthy company because they have the cash reserves and cash flow to maintain status quo. I'd like to see them take more action and I do participate in elections the Company's elections though I don't have enough skin in the game to matter when compared to the rest of the Investors. If you want to see GW change, buy their stock and create a block of investors and demand change. The only way anyone on this board can make it happen is by working within their system. Buy their shares and threaten a takeover, be that activist investor they don't like. Management won't take you seriously until you're sitting across the table from them and have support from their investors.

This is the most articulate post on the subject in as many pages of the thread as I've read. Statement of cash flows is the most important aspect of a company's short term health, and clearly, there is no distress in Games Workshop. Whether they grow or shrink, the company is healthy enough to keep on ticking for a very long time. Their cash flows and cash reserves aren't anything to get super duper excited about, but I'll bet the farm that many companies in the industry would be very happy to trade positions.

People keep saying, "will GW die with a bang or a whimper?", when more likely, they'll just likely shrink or grow, since it's a company that is obviously willing to cut costs. It won't really die at all, until there's another dominant scifi/fantasy wargaming company, and for that to happen, as long as local gaming stores are relevant, some company would have to have a better revenue model than any of GW's current competitors.

You're not going to get through to him unless you...

1. Put.
2. It.
2. In.
4. List.
5. Form.

And yeah. Two 2's!

 Bronzefists42 wrote:
I can't wait for the tell all book, economic analysis and pulp novel "too big too fail: plastic space man edition" that will be released following the supposed death of GW.


Automatically Appended Next Post:
Written by Matt Ward of course.

There's something like that out already, written by robin dews in 2007 for his mba management project. Seems harder to find online now, but it was a good read and explained what was going on pretty clearly.


Automatically Appended Next Post:

 H.B.M.C. wrote:
You're not going to get through to him unless you...

1. Put.
2. It.
2. In.
4. List.
5. Form.

And yeah. Two 2's!

you didn't put in a number 6.... how am i supposed to roll on it now?

 Torga_DW wrote:

you didn't put in a number 6.... how am i supposed to roll on it now?

6. Put.
2. It.
2. In.
6. List.
1. Form.

There you go

If you roll a number that isn't on the list, you must go and buy a new dice and try again. You know, the $15 Blood Angels ones.

*head explodes*

boyd wrote:

 agnosto wrote:
http://www.investopedia.com/terms/f/financial_distress.asp

DEFINITION OF 'FINANCIAL DISTRESS'
A condition where a company cannot meet or has difficulty paying off its financial obligations to its creditors. The chance of financial distress increases when a firm has high fixed costs, illiquid assets, or revenues that are sensitive to economic downturns.

Trailing Twelve Months (TTM) ended in Sep. 2014:
Total Assets was $144,928 Mil.
Total Current Assets was $40,516 Mil.
Total Current Liabilities was $45,232 Mil.
Retained Earnings was $7,733 Mil.
Pretax Income was -837.369456285 + 669.949609506 + -1135.87062732 + 867.668664218 = $-436 Mil.
Interest Expense was -56.2900683915 + -62.8240036291 + -1740.63904632 + -2307.08486372 = $-4,167 Mil.
Revenue was 17700.7084897 + 17733.2605677 + 18235.7729138 + 23321.2739223 = $76,991 Mil.
Market Capitalization (Today) was $24,088 Mil.
Total Liabilities was $123,641 Mil.

I don't know what else to call it when your liabilities exceed your assets......They're eating through their savings at a prodigious rate (sound like another company we know?)

*I changed the text color above to call out what I'm referencing below in my statement.

According to their audited financial results, their Net Assets (Total Assets - Total Liabilities) = 49,765. That would indicate their assets exceed their liabilities. In fact, their current assets exceed their current liabilities by almost double (aka current ratio aka liquidity ratio). This would indicate GW is very liquid because it has the ability to pay its obligations. In addition, it also has the ability to pay its commitments noted in Note 12 which are not identified in the financial statements. Refer to the balance sheet on page 5 and footnote 12 on page of the mid year financial statements.

Also, when did they acquire debt? I think I missed the memo and didn't see it as a subsequent event in their financial statements. I'm referencing this per your interest Expense calculation above. Interest expense should be broken out as a separate item on their P&L and its not listed. Its broken out so you can get a true picture of operations ie - EBITDA. EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. This provides the reader with a "true" sense of earnings from operations as the other expenses are not directly related to operations (interest is derived from debt, income taxes are based on earnings not operations, depreciation and amortization are based on capitalized assets in which cash may have been spent several years ago and in the current year are non-cash expenses). In addition, I don't see any LT debt or capital leases on the Company's Balance Sheet. How are they paying $4.2MM in interest charges?

When I look at the Company's health, I generally like to look at their statement of cash flows because it gives me a sense of what is happening with the Company. It shows what they are spending their money on and reconciles the change in cash between the periods (on an annual basis). GW is still a healthy company because they have the cash reserves and cash flow to maintain status quo. I'd like to see them take more action and I do participate in elections the Company's elections though I don't have enough skin in the game to matter when compared to the rest of the Investors. If you want to see GW change, buy their stock and create a block of investors and demand change. The only way anyone on this board can make it happen is by working within their system. Buy their shares and threaten a takeover, be that activist investor they don't like. Management won't take you seriously until you're sitting across the table from them and have support from their investors.

Umm. The info I quoted was for Sony as it was being argued that Sony was/is not in financial distress; apparently, by your statement, they are not regardless of the CFO's statement that they are hemorrhaging cash ($1.2billion abouts).

Anywho, since it's topical and all, let's examine GW using your definition of health.

Games Workshop Group PLC's EBITDA per share for the six months ended in Nov. 2014 was £0.37. Its EBITDA per share for the trailing twelve months (TTM) ended in Nov. 2014 was £0.70. During the past 12 months, the average EBITDA per Share Growth Rate of Games Workshop Group PLC was -32.50% per year. During the past 3 years, the average EBITDA per Share Growth Rate was -4.40% per year. During the past 5 years, the average EBITDA per Share Growth Rate was -2.00% per year. During the past 10 years, the average EBITDA per Share Growth Rate was 8.10% per year.

http://www.gurufocus.com/term/EBITDA_per_share/LSE:GAW/EBITDA%2Bper%2BShare/Games%2BWorkshop%2BGroup%2BPLC

So, is -32.50% in the past year healthy? According to EBITDA, GW has been in a slide for the past 5+ years which appears to be accelerating.

One thing that I look at in a retail stock is the inventory to revenue ratio.

Games Workshop Group PLC's inventory to revenue ratio for the quarter that ended in Nov. 2014 increased from May. 2014 (0.14) to May. 2014 (0.15)

An increase in inventory to revenue ratio from one quarter to the next indicates that one of the following is happening:

1. investment in inventory is growing more rapidly than revenue
2. revenue are dropping
No matter which situation is causing the problem, an increase in the inventory to revenue ratio may signal an oncoming cash flow problem.

http://www.gurufocus.com/term/inventory2rev/LSE:GAW/Inventory%2Bto%2BRevenue/Games%2BWorkshop%2BGroup%2BPLC

Is GW going to implode tomorrow? No, not even close. They're making money, albeit less than before, and turning over inventory, albeit less than before. From an examination of the numbers it looks almost like a controlled slide down. The financials are in great shape and the books look good but the company is a couple of more bad halfs from being faced with a decision to cut dividends or buy product to sell.

Talys wrote:
Just like with MtG, you "must" keep buying stuff if you play.

It depends on what you play. If you play Limited, absolutely - when you enter a tournament you buy your deck on the day. If you play Standard, cards rotate out after ~1.5 years. But for a number of major formats - like Vintage, Modern, Commander - cards never rotate out.

Talys wrote:
Yes, this is exactly my point.

@Psychopomp -- I'm not saying that what PP does is bad for customers (gamers). I'm saying that it's bad for local, independent stores. In the PP model, there are two problems for local stores:

1) the customers come and sit around taking up space without buying more product

2) the store stocks stuff that eventually is outdated and doesn't sell

That might not directly be your problem as a gamer, but it's indirectly your problem, if those stores shut down and you have nowhere to meet/play. In contrast, the GW model pushes product to players, generating constant revenue for the store -- until the customer gets fed up and quits the game. But, at least, the customers that are interested in GW "must" keep spending money. Just like with MtG, you "must" keep buying stuff if you play.

It's a more profitable model for the independent store, is all I'm saying. Which is why in every store that carries both PP and Warhammer, I see Warhammer taking the premium display space.

Okay, this is still old GW-style thinking.

First, number 2: The lack of churn means it will take a much longer time for that product to become outdated, if ever. And with historicals, it never will.

Now, number 1:

GW product sells constantly with almost no effort beyond stocking and being a curator for the merchandise because GW is modelling their strategy to keeping up their own retail chain, which sells their crap exclusively. GW needs it to work like that to support their stores - which are actually competition for the independent FLGS. That's what the GW treadmill is all about.

PP and almost every other wargame manufacturer out there focuses on producing a stable product with lasting quality of experience over time. They make a product people want, and they make it so that people keep playing it. So the customers buy, and then - assuming playing space - they come to the store to play there. They get people into the store. Once the players / prospective customers are in the store, IT IS THE STORE MANAGER'S JOB TO SELL THEM STUFF, NOT THE MANUFACTURER'S.

In the example given with the regular WM/H crowd and the dusty WM/H product in stock, what has the store done to sell the product? Have they run leagues? Because they can download the rules packet from PP's website free of charge. They can even order a prize packet for the season leagues or even a starter league. Same thing with tournaments - download the rules, maybe order the prize packet. Have they run demos than advertised them to people other than the regular players (ie, the people who have already bought the game)? Have they told people to come to the usual WM/H night and check out the game? Have they asked any of the regulars for ideas? Have they done anything but stock the product and wait for the same people to keep buying the same game over and over and over? Because only GW product sells like that, because GW's release strategy forces you to subscribe to their games, not buy them. Other wargames sell like other games, where you buy in and can be done. It requires effort on the part of the store, because the manufacturer of these other games aren't tailoring them to support an entire chain of stores supported by artificial product churn.

That's the new paradigm for wargaming in stores. Stock starter sets and common upgrades, and drum up your own damned sales, because the companies making them are focused on production, not retailing...which is good, because it means there won't be a PP store opening in your neighborhood to steal your gamers! Luckily, PP and other companies, by focusing on solid product and game support give retailers plenty of tools for drumming up their own damned sales, but it does require a little effort on the stores' part.

 fullheadofhair wrote:
I fail to understand why GW is in this position.

Because Kirby and Co. want to be? The more I read these reports, the more I feel like they're just drumming up new excuses until they've finally bled the well dry. Just sitting here, biding their time as they collect the drainage, leaving a dry husk of a company and swooping out like oil barons when it dies.

 fullheadofhair wrote:

It is really basic retail, basic analysis and common sense. I fail to understand why GW is in this position.

That they are PROUD of the fact that they don't do market research and don't know what their customer's want should easily answer your question.

So, who do we have to blame for the downfall of our beloved company? I know that Kirby and his cronies are the ones that are driving it into the ground, but who put him in power? Who originally went public with the company? Kirby is just doing what greedy worms do. Who should I direct my ire towards, really?

IIRC, kirby bought-out the prior management in the 90s and then floated the company.

 Psychopomp wrote:

Okay, this is still old GW-style thinking.

First, number 2: The lack of churn means it will take a much longer time for that product to become outdated, if ever. And with historicals, it never will.

Now, number 1:

GW product sells constantly with almost no effort beyond stocking and being a curator for the merchandise because GW is modelling their strategy to keeping up their own retail chain, which sells their crap exclusively. GW needs it to work like that to support their stores - which are actually competition for the independent FLGS. That's what the GW treadmill is all about.

PP and almost every other wargame manufacturer out there focuses on producing a stable product with lasting quality of experience over time. They make a product people want, and they make it so that people keep playing it. So the customers buy, and then - assuming playing space - they come to the store to play there. They get people into the store. Once the players / prospective customers are in the store, IT IS THE STORE MANAGER'S JOB TO SELL THEM STUFF, NOT THE MANUFACTURER'S.

In the example given with the regular WM/H crowd and the dusty WM/H product in stock, what has the store done to sell the product? Have they run leagues? Because they can download the rules packet from PP's website free of charge. They can even order a prize packet for the season leagues or even a starter league. Same thing with tournaments - download the rules, maybe order the prize packet. Have they run demos than advertised them to people other than the regular players (ie, the people who have already bought the game)? Have they told people to come to the usual WM/H night and check out the game? Have they asked any of the regulars for ideas? Have they done anything but stock the product and wait for the same people to keep buying the same game over and over and over? Because only GW product sells like that, because GW's release strategy forces you to subscribe to their games, not buy them. Other wargames sell like other games, where you buy in and can be done. It requires effort on the part of the store, because the manufacturer of these other games aren't tailoring them to support an entire chain of stores supported by artificial product churn.

That's the new paradigm for wargaming in stores. Stock starter sets and common upgrades, and drum up your own damned sales, because the companies making them are focused on production, not retailing...which is good, because it means there won't be a PP store opening in your neighborhood to steal your gamers! Luckily, PP and other companies, by focusing on solid product and game support give retailers plenty of tools for drumming up their own damned sales, but it does require a little effort on the stores' part.

Sure thing, call it what you will. If those stores would just ratchet up Lumia, Windows Phone would outsell iPhone! This is terrible logic. If you want to shout: IT IS NOT SOLEY THE INDIVIDUAL STORE'S RESPONSIBILITY TO DRUM UP SALES!!

It is the manufacturer's responsibility to create hype, and create churn. Stores are staffed by low wage earners who aren't the best sales people in the universe. If they were, they'd work for pharmaceutical companies, make six figure salaries, and have company cars and expense accounts. The only person in the store that makes a lot of money is the store owner.

When Microsoft writes Halo, is it Best Buy's job to walk up to everyone and say, "BUY HALO! HALO IS GOOD!"? How about when Xbox One or PS4 are released? Who's job is it to promote it? Who puts up the TV ads? It's squarely on the manufacturer to create hype, because they have the budget to do so. Little wee stores have enough problems, like paying rent, dealing with theft, and making ends meet.

The fact is (and it really is a fact in my area if nowhere else), the WMH crowd buys a lot less stuff (including hobby supplies) per player than the 40k crowd, and the XWing player buys even less. The infinity player, and malifaux players buy little bits of stuff too. That's why when you walk into a store, the front 1/4 of the store is all GW stuff. It sells. Among other things, one problem with WMH being "stable" or whatever you want to call it, there is really nothing left to buy for people who have all their gaming pieces for two or three factions. The new releases are so sparse, in comparison.

If the new paradigm of wargaming stores is what you purport it to be, local stores are doomed.

By the way, you're wrong about untis being outdated. On Boxing Day, nobody bought a Hordes starter box with metal models (old box) marked down to $45. Nobody bought a Trollbloods Scattergunner, with metal models, marked down to $25. Store owner offered them to me for five bucks less than that the next week, but I couldn't bring myself to pull the trigger, because they'd sit in the box for another 10 years before I finally gave them away. There were tons (and I mean *tons*) of PP metal blisters marked down way below half price that people passed on. Yet, at the end of it all, every single playable 40k model (well-discounted) was sold. I'm talking, every drop pod, every Rhino, predator, Hydra, troops of every faction, box sets, Tyrants, stormravens, and even most of the factioned terminators. The only stuff left was junk that has no value other than for modelling, and terrain/fortification, which never sells well.


Automatically Appended Next Post:

 puma713 wrote:
So, who do we have to blame for the downfall of our beloved company? I know that Kirby and his cronies are the ones that are driving it into the ground, but who put him in power? Who originally went public with the company? Kirby is just doing what greedy worms do. Who should I direct my ire towards, really?

I do believe that GW becoming a public company was bad for both the players and the game (but probably great, financially, for the founders).