And you wonder why developers 'hate' PC gamers ...

[Ail]

Ail said:

9Chiba said:

Ail said:

9Chiba said:

Ail said:

9Chiba said:

Ail said:

naznatips said:

Ail said:

Lets keep going and deconstructing your posts because it is kind of funny.

Activision didn't loose money last year, they made 418 million$, they are projecting 650 million$ of profit for next year, that is fact straight from their financials, not imaginary numbers invented to make a point...

 

EA made a profit in 2010 and will make one in 2011 too, current consensus is 0.67$/share, with 305 millions shares outstanding that's a little under 200 million$.

http://www.joystiq.com/2010/05/11/ea-posts-677-million-loss-in-fy2010-alongside-downed-revenues/

Lying is not a good idea. All my figures are straight from reputable sources. I will call you on this.

http://www.shacknews.com/onearticle.x/66326

EA's total losses over the last 3 quarter are about $300 million. In 2010 it was about $700 million. They have lost $1 billion in the last 2 years.

Thanks for demonstrating your bad understanding of financial numbers and Non GAAP.

You quote Joystick and Shacknews for financials.

I quote fidelity...

Guess which ones knows a little better about the financial world...

http://eresearch.fidelity.com/eresearch/evaluate/fundamentals/earnings.jhtml?stockspage=earnings&symbols=ERTS

http://eresearch.fidelity.com/eresearch/evaluate/fundamentals/earnings.jhtml?symbols=ATVI

 

Hint : Those GAAP numbers you guys have been quoting around and that gets reprinted in gaming sites don't mean shit, Non GAAP is all that matters...........

No.

Non GAAP is the reason for the Great Depression.

And here are the income statements for ERTS for the last three years.

http://eresearch.fidelity.com/eresearch/evaluate/fundamentals/financials.jhtml?stockspage=incomestatement&symbols=ERTS

They're from the same site you posted, and it took about 3 seconds to find.

What you posted are quarterly earnings reports. That has nothing to do with how the company is doing, only how much investors expect to receive as dividends per share. A company can be bleeding but still increase in stock price.

Those numbers have nothing to do with dividends for the simple reason that Electronics Arts doesn't pay dividends and hasn't in the last 5 years at least....

Earnings per share is simply the Non GAAP profit for the quarter divided by the number of shares.......( the earnings per share on the page I linked that is)

 

For most industries GAAP and non GAAP numbers are usually similar and the difference tends to be one time event which is why most people prefer GAAP numbers.

However this is not true for the software industry and especially the video game industry.

The reason is that a few years ago Electronics Arts and Activision both started heavilly to defer revenue from their products to later quarter and as a result for those companies Non GAAP is a better view of how the company are really doing. ( if you look at ATVI latest financial report you will notice they defered over 1 billion$ of revenue ( they got the cash but for accounting purposes they decided to act as if it had not come in yet. ))

Yea, forgot, nothing to do with dividends, edited my post ^^.

And while companies may prefer non GAAP (they always have), investors still prefer GAAP, simply because GAAP tends to be much more conservative in terms of earnings and income.

The problem is that it is only true if the only difference is one time events, the whole defered revenue shit has really made Non GAAP a better view of how ATVI and ERTS works.

 

Thank god soon that will not be a problem anymore as I explained, the defered revenue from the previous year is catch up with the one from the current year and ATVI is actually projecting to have very similar GAAP and nonGAAP revenues for 2012 ( calendar 2011).( quarters will still be widely different but over a year the numbers will be similar)

Honestly, I've never really looked into software companies' business models so I can't say anything. Could you show me an example of deferred revenue (I assume it's the same as unearned income/accounts payable)

http://investor.activision.com/releasedetail.cfm?ReleaseID=548900

 

Look at Account payable and defered revenue line....

Then compare with Q3 :

http://investor.activision.com/releasedetail.cfm?releaseid=527295

Defered revenue increased by about 1 billion$ between both quarters...( and account payable by 100 million$ or so).

 

PS : My understanding is that with the advent of online gaming, companies can claim they will incur costs beyond the cost of sales and as a result they can defer some revenue. Where it gets tricky is that most of them choose to defer a lot more revenue than what those costs are going to be. If I had to guess I would say in the end they do this to be able to provide 4 similar quarters in the year instead of one really big quarter and then 3 sucky ones........

The other practical effect is that despite the fact that Q4 2010 was the best ever quarter for ATVI, the overall 2010 year was average and despite the fact that their projections for 2011 are not that good, their profit in 2011 will increase by 50% ( projected  650 million$ profit vs a little over 400 this year), all because the good sales of Q4 2010 will be actually included in the 2011 GAAP revenue..

PS2 : One nice effect it has for ATVI is that due to this massive revenue deferal it isn't not hard for them to predict what GAAP numbers will be the following year as 1/3rd of the money is already done before the year starts, another reason why analysts prefer to view the Non GAAP results for those companies as those reflect the reality of the quarters, not what was done the previous quarters...

By the way there is a table at the end of Q4 report that explains why the NonGAAP and GAAP results are so different and as you can see, the huge reason is this deferal of revenue...

 

Three Months Ended December 31, 2010		Operating Income (Loss)	Net Income (Loss)	Basic Earnings (Loss) per Share	Diluted Earnings (Loss) per Share
GAAP Measurement		$	(397)	$	(233)	$	(0.20)	$	(0.20)
	Less:  Net effect from deferral in net revenues and related cost of sales	(a)		859		628		0.52		0.51
	Less:  Stock-based compensation	(b)		37		24		0.02		0.02
	Less:  Restructuring (included in general and administrative)			(1)		-		-		-
	Less:  Amortization of intangible assets and purchase price accounting related adjustments	(d)		77		38		0.03		0.03
	Less:  Impairment of intangible assets	(e)		326		198		0.16		0.16
Non-GAAP Measurement		$	901	$	655	$	0.54	$	0.53