EA Quarterly report

[beastwork]

I probably should have clarified this.

the graph is not showing spending in dollars. its comparing how much spending has grown vs 2007. So think of it like this - Marketing spending has increased 49%, R&D has increased only increased 31%, and net income has increased 36%. It shows that the business model is skewed towards marketing the hell out of games and less towards game development (at least over the last 3 years).

[beastwork]

Quote: Originally Posted by kehlis

That's an interesting graph, do you know if there is a breakdown by game? I would be curious to see what it would look like for specific games...

the annual report just shows the results of the parent company. EA would never release data at that level of detail.

Quote: Originally Posted by mestevo

Annual figures look bad due in part to a poor economy though, they made a profit in the 4th quarter and beat estimates. http://online.wsj.com/article/SB1000...ness_whatsNews

yep the economic impact has been well documented. I posted this more to show how EA chooses to reinvest its money, not to pick on the sales figures. I'm guessing that the Madden franchise is getting less money for R&D and more for marketing which would explain the shallow updates over the last few years

[Exonerated]

A simple profit/loss statement is not a clear representation of an entity's current financial position.

For this to be a better representation, vertical analysis, trend analysis and ratio analysis would be effective in giving stockholders more detail.

So while 667 million loss may sound like a ridiculous loss, its meaningless without other criteria to compare it to. Maybe EA bought 100 million in assets last year, so results may be skewed?

I'd love to check out EA's income statement, balanace sheet and cash flow statements.

Ok. Regurgitation of accounting 101 over.

[RubenDouglas]

real interesting stuff
http://www.google.com/finance?q=NASDAQ:ERTS&fstype=ii

http://finance.yahoo.com/q/is?s=ERTS...atement&annual
http://finance.yahoo.com/q/bs?s=ERTS...e+Sheet&annual
http://finance.yahoo.com/q/cf?s=ERTS+Cash+Flow&annual

im rusty on this stuff. anyone care to give a quick rundown after checking out those links, typed out for the common mans understanding.

[Exonerated]

Ok. From my unprofessional analysis of the data at hand, this data is different to what 'media outlets' are reporting. One must suspect that the media is just reading the numbers to create an article showing EA's death or something.

Now. Revenue has been steadily increasing each year. But for some reason, the Cost of Goods Sold is increasing way too fast. It's costing EA more and more each year to produce the same game and sell it for $60. Heck, it seems to cost $30 just to put each game together this year, as opposed to $24 or less in 07 and 06. Over millions of copies thats quite a lot of money.

It seems 50% of EA's gross profit just goes into selling the game these past 2 years, whilst less than 40% in 07 and 06.

Seems to me that the loss in profits is less of EA's own doing and more a result of external economic factors (most probably the global financial crisis and stuff).


Also, EA paid 472 million for something this year, whilst only paying 18 million for unusual expenses in 07.

This sounds to me like the acquisition of licenses perhaps? (Just putting it out there, definitely nothing to do with litigation to cause this ridiculous numbers)

Also, they just revalued their goodwill down by 400 million. (not real cash)

So all things considered.

THe HUGE increase in operating expenses, unusual expenses (licenses) and revaluing of goodwill (as a result of external economic factors) shows the 1 billion dollar "loss".


This number is extremely misleading. As the economy comes up again, I expect EA will be turning out a huge profit.

[Exonerated]

Also, EA is selling more than ever.

[beastwork]

I think you read the chart wrong. the data comes from the income statement but I'm reporting "Net Revenues" not "Net Income". understand the difference.

It’s refreshing to see glimmers of intelligence every once and a while here. I didn’t have the energy to do a thorough breakdown of the data, and considering the audience i wanted to keep it fairly simplistic. I’m fully aware that it is very difficult to glean the inner workings of EA simply from looking at the income statement. It’s a tool to measure financial position, and not necessarily to exhibit the details of corporate strategy.

However, taking a high level view one would like to see a game company show a continual dedication to R&D. I’ve speculated for a while that EA has put many of its franchises on auto drive and have bolstered sales simply by cramming it down the populaces’ throats. The EA media blitz machine is one of the best in the world. But like many corporations with almost endless resources, the strategy leans towards “beat the competition by screaming the loudest”. What I wanted to show with the chart is that it appears EA is making the choice to increase marketing efforts at a higher rate than they have increased R&D efforts. Mind you I’ve never worked in the software development industry but I have to suspect that gamers would benefit from more and more R&D spending. (more games, and more games of high quality)

[Exonerated]

Quote: Originally Posted by beastwork

I think you read the chart wrong. the data comes from the income statement but I'm reporting "Net Revenues" not "Net Income". understand the difference. It’s refreshing to see glimmers of intelligence every once and a while here. I didn’t have the energy to do a thorough breakdown of the data, and considering the audience i wanted to keep it fairly simplistic. I’m fully aware that it is very difficult to glean the inner workings of EA simply from looking at the income statement. It’s a tool to measure financial position, and not necessarily to exhibit the details of corporate strategy. However, taking a high level view one would like to see a game company show a continual dedication to R&D. I’ve speculated for a while that EA has put many of its franchises on auto drive and have bolstered sales simply by cramming it down the populaces’ throats. The EA media blitz machine is one of the best in the world. But like many corporations with almost endless resources, the strategy leans towards “beat the competition by screaming the loudest”. What I wanted to show with the chart is that it appears EA is making the choice to increase marketing efforts at a higher rate than they have increased R&D efforts. Mind you I’ve never worked in the software development industry but I have to suspect that gamers would benefit from more and more R&D spending. (more games, and more games of high quality)

I didn't mean your data. I just meant that in general, the media likes to portray EA as the big evil corporation that is justifyable sinking.