The Math of Undertracking

[amirnetz]

redspear said:

Also for a person who is such a numbers person to discount tracking and to only go by corporate PR releases is astounding being that tracking is based entirely around numbers. GfK, NPD, Chart Track, Famitsu, and Media Create are all independant and professional tracking agencies. VGchartz is also very good tracking site as well. It is true that the numbers from these sources cannot be taken as solid for a single week or day but as time goes on the outliers that affect these numbers even out that is the beauty of margin of error and also the bell curve. 

Tne last thing all people are saying here is that Fiscal reports are a good thing they are accurate and not estimated nor rounded. they are also very clear and broken down. PR statements are controlled and only reveal what is expressly written.  

Just to be clear:

1. The tracking firms are tracking different numbers than the one the companies report. ("Sold to retailers" vs "sold to consumers"). In fact, the companies does not have any visibility to the second measure except through the tracking firms.
2. The numbers that the companies report are accurate. Period. They are not estimates, they are not statistical samples. They are the sales that show up in the corporate accounting system.
3. The numbers reported by the tracking companies are estimates. They are typically based on a big statistical sample and partial access to the reporting system of some of the retailers, but they are still just estimates. That said, they are accurate enough and valueable for the companies to pay for them, but they are still just estimates.
4. There is a mathematical relationship between the numbers reported by the companies (which are very accurate) and the tracking estimates. The sold-to-consumers will always be lower than the sold-to-retailers. Retailers will always have some inventory that was was purchased from the companies but still not sold to the consumers.
5. The tracking companies often adjust their estimates based on the accurate shipment data from the companies. If the shipment numbers are smaller than their own "sellthough to consumers" estimates were then their estimate needed to be adjusted.
6. I found such discrepencies in VGC and pointed them out (up above in the thread) and the responses I got was that the companies were lying in their public statements.
7. I explained in detail that it is illegal to companies to lie in the public statements about their business performance because such public statements can be used as investment guidance.
8. I do this staff for a living. I am no lawer but I am doing PR and analysts work and the rules are clear.
9. Still, it seem that reason fails in this forums. It seems it is much more fun to believe that companies are just a bunch of lying criminals. I can understand the fun part of it, I just hope that with some of the education I provided reason will prevail over fiction.

Enough.