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Reader Comments (16)

Posted: Nov 22nd 2011 11:16AM bobfish said

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They still made a profit even though they purchased Cryptic that quarter... damn.

I also quite like the "decision to temper in-game monetization activities", does that mean they stopped trying to milk players for every cent they had? :)

Posted: Nov 22nd 2011 11:39AM Space Cobra said

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@bobfish

Agreed with the buyout; pretty impressive.

And, let's hope so on the monetization. I am mostly concerned for STO.

Looks like they are going at a nice, careful pace in any event with their company's growth.
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Posted: Nov 22nd 2011 12:17PM Superman0X said

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@Space Cobra

They are looking to extend the life of their games. It means that they don't have new games ready yet, so they are putting what they have on the slow burn, to keep them going until they do have new games/content.

They will make the same amount of money from the game, just over a longer period.
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Posted: Nov 22nd 2011 4:10PM Yellowdancer said

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@Superman0X

They fixed that with Cryptic. Cryptic has NWN coming out in 2012 and maybe one in 2013. They'll probably pump out one a year now using Cryptic's engine.
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Posted: Nov 23rd 2011 12:13AM ImperialPanda said

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@bobfish

The money spent buying a company has no effect on the quarter's revenues and profit.

Profit declined because of PWE's intent to eventually provide dividend payments to shareholders from income of PRC subsidiaries. Part of that income is transfered to a holding company. And hence there's a withholding tax of 10.7m USD recorded as a deferred tax liability for when the dividend is eventually paid out.

Revenue rose because of the purchase of Cryptic, no doubt. But it's clear that Cryptic provided no actual profit.
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Posted: Nov 23rd 2011 12:25AM Space Cobra said

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@ImperialPanda

Umm...you may have a solid reason in your second paragraph, but you don't seem to understand a basic business tenet.

All companies, not just PWE, have their profits/revenues fall when they buy something, be it new machinery or a new company.

This represents money going "out" that doesn't stay in the company's "pocket". If they didn't spend it on anything, they'd KEEP the money. But they spent it. It's like if you could somehow never spend money on bills or food, that money that would be spent is now yours and in your pocket. That would be considered a profit, as you have eliminated a (daily) expense.

Same thing about paying worker salaries, that is why, when a company laysoff workers, their revenue/profits go up: They are not spending that money on salaries.

With most companies, profits/revenue always go down afterwards; just look at the stock prices of other companies when they bought companies. With next quarter, they may start to make a profit, but it depends on the company's value. And don't forget, they still have to pay salaries/bills/etc. for the other company, too. It could take awhile for profits to sneak in if the company is weak.
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Posted: Nov 23rd 2011 12:42AM ImperialPanda said

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@Space Cobra

They took a $88m loan that is recorded as a liability. They have a new subsidiary that is listed under property, equipment, etc as an asset. That balances out the balance sheet aspect of the earnings statement.

It has absolutely no effect on income statement (revenue, profits).

Buying/selling companies is not a "profit" or a "loss." It's a trade of cash for property. When employees work to produce products and services, that makes "profit."

Please... it's kind of... my job? I'm not gonna comment on the rest of your examples.
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Posted: Nov 23rd 2011 1:31AM Space Cobra said

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@ImperialPanda

You must be an accountant? Work with State/Fed taxes? Maybe a traditional bank?

I mean in terms of practicality, you are right. The asset/property you buy should be worth what you pay for it, barring depreciation over time.

The thing is, when dealing with zee sexy stocks of companies and dividends and some CFOs, most look at the cash and not the property. Granted, it's silly having to deal with these two viewpoints; laying off workers. Shareholders wanting and expecting higher dividends. And the rest.

You are right, but the "Press" and perception via stockholders looks at the cash on hand. I don't like it myself, but things are always framed in that way on the news and in certain reports. So, it's just looking at things in 2 different ways. I would say this press release is more looking (or "spinning") things to look at it via what I said. But you are right; in reality, the money is transferred to another asset/property and isn't really "destroyed".
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Posted: Nov 23rd 2011 2:14AM Space Cobra said

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@Space Cobra

I mean, as a business owner, that $88 million was not "free money", it had to come from somewhere. Since it is a loan, that loan has to be eventually repaid. Of course, maybe not for this quarter but, long-term, it is a drain. I have to either pay it out of Cryptic's future profits or somewhere, so that future profit is denied to me because it goes to repayment of the loan (plus interest).

I am thinking they are looking at this in a practical sense (they are an Asian company) because that loan is to be repaid. I know that many businesses do take on loans to grow, but again, the banks like to see that money back (plus interest) and while it is an asset that the banks could repossess in the event of a bankruptcy, they prefer cash.

I've always seen this tendency to "view" things in your way in the tax-circles, but that money came from somewhere. We can say, with PWE, it "evens out" but the bank had to spend it, so the bank is out $88 million (until the loan, plus interest is repaid). Maybe I view things long-term and not in set quarters. Eventually PWE has to pay the bank, so...
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Posted: Nov 22nd 2011 12:20PM Juicer said

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PWE is the mostly blatant pay for power cash shop company out there. Not to say that STO or any of their other cryptic titles will follow this route but I think its safe to say there will be paying for power( most likely in some form of luck based, vegas odds kind of purchases).

Ladies and gentlemen, welcome to the Star Trek Casino!

Posted: Nov 22nd 2011 12:59PM Fabius Bile said

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@Juicer
actually they are pretty par for the course for a F2P developer/publisher. God knows i've seen worse.

but yeah, when companies like PWE are the average, you know the business model could perfectly be considered digital scamming... not like it isnt, anyway.
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Posted: Nov 22nd 2011 1:00PM (Unverified) said

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@Juicer

Allods and Runes of Magic are much worse than any Perfect World game when it comes to pay to win. Perfect World is actually one of the least offensive non-American companies on that front.
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Posted: Nov 22nd 2011 6:08PM EventVox said

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@Juicer

PWE is pretty bad about their cash shops but still nothing compared to LoTRO or Runes of Magic.
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Posted: Nov 22nd 2011 6:31PM Dianoga4 said

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I used to play PWE games until they banned my account for apparently "logging in from a banned region or an open proxy". I live in Canada which is not a banned region. I had played various PWE games for a couple or so years and then took a break for a few months to play something else. Logged in for the first time in months and two days later I get an email saying I'm banned for he above reason. I searched around and found out that many people over the past couple of years or so had been banned for the same reason. Many said to just email them and it would get fixed. I tried emailing them many times over the past two months or so without a single response. The only thing I've changed is my ISP. Does my ISP have an open proxy or something I don't know but if that's the case I guess making a new account would be out of the question as well then because it would get banned for the same reason./end rant.

Sorry for the rant, just get annoyed when I think about PWE heh.

Posted: Nov 23rd 2011 12:30AM Space Cobra said

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@Dianoga4

I would try to take it a step further. Either call call their offices via phone or find some other method of reaching Customer Support (Live Chat?).

I am not familiar with PWE's ways, but it seems obvious they are just making sure, You are "you" and the ban is to prevent hackers from using it, which they may think happened to you since your ISP changed.

You just need to reach someone and say, "Yeah, that's me!"
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Posted: Nov 23rd 2011 1:09AM Dianoga4 said

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@Space Cobra Yea you could be right. It could be that they are just making sure. I'll have to take a look for their contact phone numbers.
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