GW issues profit warning..

[weeble1000]

I don't really want to get into a flame war with you, Denzark, but you only took salary into account. There are other factors to consider when totaling income. Admittedly, the exact number is certainly less than 800,000, but it's around 770,000, so I rounded up and said that it was close to 800,000. For example, I get a bonus, health care, retirement, etc. All of that should be taken into account when considering the income I receive per year and the same goes for Mr. Kirby.

But even if you only took salary into account, the man is making more than 600,000 dollars. Plus he's got about 1.9 million shares that each returned roughly 38 cents in dividends. Any way you slice it he's making a ton of money considering that the company is not doing well financially and has not been doing well for some time now. And his salary increased in spite of a supposed salary freeze.

[Denzark]

I don't really want to get into a flame war with you, Denzark, but you only took salary into account. There are other factors to consider when totaling income. Admittedly, the exact number is certainly less than 800,000, but it's around 770,000, so I rounded up and said that it was close to 800,000. For example, I get a bonus, health care, retirement, etc. All of that should be taken into account when considering the income I receive per year and the same goes for Mr. Kirby.

But even if you only took salary into account, the man is making more than 600,000 dollars. Plus he's got about 1.9 million shares that each returned roughly 38 cents in dividends. Any way you slice it he's making a ton of money considering that the company is not doing well financially and has not been doing well for some time now. And his salary increased in spite of a supposed salary freeze.

I don't get where the 'not doing well' comment comes from, as if you read through the financial report you'll see growth in the last 3 years - small admittedly but growth. Not bad against the backdrop of global downturn, and I don't recalll you commenting thus in years 1-3 of this period - its year 4 before you started yapping...

But, this shall be the last I debate on the subject, as I don't want to get in a flame war either. Quite simply, on another thread Eldargal and Fuzz pointed out an internet truth - that things happening in a very small amount of places get magnified into a world ending doom.

What pisses me off is that although you can just vote with your feet, like Aldramelech, becasue the prices are extortionate, you are trying to turn it into some morale crusade and actively harm a company whose products I use.

As Eldargal et al identified, you are not the forefront of some great horde who will recapture the esential spirit of GW with your outrage, you are just one of the more vocal geeks suffering nerd rage which, on this subject I shall endeavour not to get dragged into again.

Fin.

[SandWyrm]

Recession by British Government definition, is when there is negative financial growth for 2 or more consecutive quarters of the financial year. When that negative cycle becomes a positive, the recession is over.

That may be the definition, but who's in charge of the numbers?

Any cursory examination of the data and methodology changes over time will expose fraud for political gain. I'm not intimately familiar with the situation in Britain, but I know the statistical fraud that my own Government (US) is guilty of. Unemployment, for instance, is not quite double the reported rate if you go by early 1980's methodology instead of current. Our inflation numbers exclude fuel and food rises by various slights of hand. Our industrial production numbers give US companies credit for a total product, even if they only assemble pieces imported from abroad.

So be skeptical.

I can't argue with your figures of profits cos I don't claim to know them - its just that if their business plan was working well in 2009 (the figures were if I recall £8m profit worldwide) then their plan must have been good whilst other British high street companies were going down the pan.

As I understand it from reading previous reports, GW's North American division is break even at best, even though revenues here are high. Most of the actual profits come from Britain and the European mainland. Revenue-wise, GW's best years were when the LOTR movies were in theaters. But they squandered most of that money and borrowed more to pay large dividends, much of which ended up in executive pockets.

They've been turning things around lately, but their financial position is still weak. Made worse by some very questionable decisions, such as purchasing the rights to the upcoming Hobbit film. So they don't have the pricing flexibility that they should, because there's all sorts of other costs to consider besides mould production and materials costs. They're also majority-owned by 3 hedge funds, which demand performance.

[weeble1000]

The reason I believe Games-Workshop isn't doing well has to do with the company's small profit margin and diminishing market share. The company's own Chairperson and CEO admit that the company has not been doing well financially. The fact that the company's revenue remained stable while sales dropped indicates that a price hike was keeping the company on an even keel. That's not sustainable because the company cannot continue to increase prices as sales continue to drop. Additionally, firing employees is a quick way to cut costs in the short term, but generally has negative consequences in the long term.

Overall, I believe that Games-Workshop has not been cultivating the customers that should be driving the majority of its sales. One of the significant indications of this has been the way that Games-Workshop has handled the defense of its intellectual property over the past several years. Instead of working with passionate and talented hobbyists to develop amiable agreements that serve to tangibly strengthen its intellectual property, such as negotiating license agreements, Games-Workshop has instead manipulated the legal system to intimidate small, hobby-focused business, such as Chapterhouse Studios, and foster an environment of fear and doubt that infects even individual hobbyists that aren't selling or distributing their work. Not only is this practice an amoral abuse of the American legal system that very well might expose Games-Workshop to affirmative litigation, but it makes very poor business sense.

The Chapterhouse Studios case is a convenient example for a few reasons. First, out of the complaints that Games-Workshop has filed in the past three years, the Chapterhouse complaint is particularly egregious. Second, Chapterhouse Studios very well might attempt to defend itself, which is an effective contrast to the results that Games-Workshop expects to achieve with this type of litigation and has in fact managed to achieve in the past. This allows one to clearly identify the negative, unjust, and amoral implications of Games-Workshop's legal strategy by comparing the Chaterhouse case to those that the company has filed in the past. Finally, Games-Workshop is attempting to cast a very broad net with the Chapterhouse complaint and is in fact using this litigation to attack many aspects of the wargaming industry. For example, the complaint alleges that the term "bits" is a distinctly British term that Chapterhouse uses to underscore its connection to Games-Workshop (paragraph 38 of the complaint).

Right now is the perfect time to effect change in Games-Workshop's business and legal strategies. The company is not doing well financially, whatever some people might say about it. The company is beset by increasingly strong and viable competitors that are chewing away at its market share. The company has exposed itself to considerable risk by overextending its reach with the Chapterhouse Studios lawsuit. Games-Workshop's vulnerable position means that the company's management should be in a position to take customer feedback and criticism more seriously than it has been in the recent past.

This is significant because the company's management has made their position vis a vis the customers quite clear. They expect to be able to remain viable by continuing to charge overly inflated prices because the customers are loyal and "willing to pay." This position takes the goodwill of customers for granted even though Games-Workshop has done little to cultivate that goodwill. I think it is important to let Games-Workshop know that the goodwill of its customers is not something that should be taken for granted. An effective way to do that is with a boycott, even if it is a very small boycott, such as a single model in a line, or even a single purchase, as long as customers who make that choice communicate the reasons for it to Games-Workshop.

The Chapterhouse litigation is a separate but related issue. It is emblematic of the way that Games-Workshop has victimized its hobbyist customers, but it is also a deplorably anti-competitive legal tactic. Because I vehemently disapprove of this type of legal action, I intend to support whatever defense Chapterhouse Studios choses to make. I also encourage others to support Chapterhouse if they feel the same way.

[Denzark]

That may be the definition, but who's in charge of the numbers?

Any cursory examination of the data and methodology changes over time will expose fraud for political gain. I'm not intimately familiar with the situation in Britain, but I know the statistical fraud that my own Government (US) is guilty of. Unemployment, for instance, is not quite double the reported rate if you go by early 1980's methodology instead of current. Our inflation numbers exclude fuel and food rises by various slights of hand. Our industrial production numbers give US companies credit for a total product, even if they only assemble pieces imported from abroad.

So be skeptical.



As I understand it from reading previous reports, GW's North American division is break even at best, even though revenues here are high. Most of the actual profits come from Britain and the European mainland. Revenue-wise, GW's best years were when the LOTR movies were in theaters. But they squandered most of that money and borrowed more to pay large dividends, much of which ended up in executive pockets.

They've been turning things around lately, but their financial position is still weak. Made worse by some very questionable decisions, such as purchasing the rights to the upcoming Hobbit film. So they don't have the pricing flexibility that they should, because there's all sorts of other costs to consider besides mould production and materials costs. They're also majority-owned by 3 hedge funds, which demand performance.

Look fella, GW is a Brit company. I use Brit definitions of recession, and a Brit perspective that says, when Woolworths goes bust, and GW doesn't, they aren't doing bad. I know something like 65% of the US population thinks 96% of what the gubment tells them, is lies. Unemployment and inflation have nothing to do with the simple fact that the country (UK) in the last couple of quarters, grew by 0.2 of a percent or something similar. Tiny growth, but enough (and not having a minus in front of it) for HMG to say we are out of recession.

If they were lying that blatantly and publicly believe me the papers would tear them. Can't be arsed to google the UK Financial times to confirm it but believe me, we are no longer in recession - last year GW made £16m, £3m of which were royalties (Dawn of War etc) - when we WERE in recession. This is good.

[Faultie]

Getting dragged back in.

I thought you were going to get dragged back in.

[Denzark]

I thought you were going to get dragged back in.

Faultie - saying I said things I never said... What are you, my wife???

PS its the weeble who won't drag me in - you know they wobble but don't fall down, right?

[Duke]

Just did a post on gw corporate on my personal blog...

[weeble1000]

Thanks for the link Duke. I like the article, and not just because it is somewhat critical of Wells and Kirby. I'm not a financial analyst, so reading those reports was like beating my head against a wall. And it was all in pounds. It's nice to have some analysis from a person more conversant in the topic area. I look forward to your next post about it, if you decide to do one.

[Duke]

I think I will, it is just hard for me not to put people to sleep with all the numbers analysis and stuff. But if the people want it the duke will provide it,

Duke