Blizz\Act posted a 4th quarter loss of $72 million, but that’s a small dent in the juggernauts that brought you Guitar Hack and World of Herioncraft. It really makes me realize that even the big boys of the gaming industry are taking a few shots to the nuts, although not nearly as bad as some others.
It still doesn’t answer the brain burning question: when the ass are Diablo 3 and Starcraft 2 coming out?!
Without putting too fine a point on it, these results are smoke and mirrors. They didn’t lose money. They made money hand over fist. They were looking for ways to deep-six or defer profits.
The way that Activision/Blizzard got to a 72 million loss was by:
1 - Excluding revenue from Activision made before the merger: goodbye Call of Duty and Guitar Hero revenue of $1.3 billion with a B.
2- Excluding over 90% of the revenue from Wrath of the Lich King XP sales and other online revenue: goodbye to another $700 million in revenue. News flash: WoW is one of the most profitable software products in the world.
3- Say hello to one time acquisition charges of the Activision/Vivendi merger in millions of $$ in expenses.
Result: Nearly 2 billion in revenue excluded or deferred, millions of $$ in one time acquisition charges added in. That’s what gets Uncle Sam to a 72 million dollar quarterly loss.
Activiion/Blizzard has cash reserves at massive levels and is essentially debt free. There are no losses here to my eye.
In fact, times have never been better. These guys are RAKING IT IN. People who sold shares after this reported “loss” are not reading the details of these reports.
I’m only guess here, but I’ve listened time and again to reports about banks and other businesses putting up as much red ink as possible just to get it all off the books. In other words, since everyone else is doing poorly, now is the time to get all your bad investments, expenses, etc. and hide it amongst the tide of losses. I was actually really surprised to hear they posted a loss because I thought if Blizz is losing money while having probably the biggest game out there, then what hope do other game companies have. Might also be a way to defer the taxes on that river of money coming from WoW.
/bastards, all of them
//still want my starcraft 2 and diablo 3
If they are ordering their affairs in accordance with Generally Accepted Accounting Principles - all is well.
And I assume that is exactly what they are doing, I might add. I’m not suggesting anything criminal or improper. I AM suggesting that to accept this at face value as “a loss in tough times” is to be a fool.
Why do it? Smooth out revenue and minimize tax. Those have long term positive consequences for a public company.
I didn’t mean to imply they were outright hiding revenue. However, when you split off revenue so:
[li]it is taxed as earned by Activsion before the merger, which probably has losses it can use that don’t carry forward post merger; or
[/li][li]to defer revenue earned by expansion packs over the life cycle of the product (a practice now coming into vogue for subscription based games)
You are doing things which serve to minimize tax and appear to be in the best interests of the shareholder. That’s accounting; probably nothing wrong with doing that at all.
But when you look at quarterly “losses” uncritically, and fail to see the bigger picture of where the revenue is being reported - or when - you are not paying attention to the money.
Think the drama over “Brutal Legend” is over? Think again.
It turns out that Activision Blizzard is under the impression it still has publishing rights to the game. And it’s threatening to sue developer Double Fine and new publisher Electronic Arts as a result.
Makes perfect sense to me. Considering this is your third post in this thread, (each one stating you don’t understand what people are talking about,) maybe you could just sit the rest of it out, and spare everybody else your charming stream of barely consciousness.