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Square Enix Reports "Extraordinary Loss" - President Resigns

This sparse document (Adobe Acrobat format) announces the resignation of Yoichi Wada from his post as president of Square Enix. This follows the revelation that the Japanese publisher anticipates an "extraordinary loss" in its next financial reporting noted in a statement (Adobe Acrobat format) with revised financial forecasts. VG247 summarizes the bad news from the revision, noting that this includes lowering the company's projected sales slightly, but involves a giant increase in losses, saying the company's previously projected 3.5 billion net income loss is now anticipated to be closer to 13 billion ($138 million USD). Word is the revision is due to slow sales of major console titles, a sluggish arcade market, and the addition of approximately 10 billion in restructuring efforts, saying: "In view of the rapidly changing environment of the game businesses, the Company has decided to implement major reforms and restructuring in its development policy, organizational structure, some business models, and others."

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58. Re: Square Enix Reports Mar 26, 2013, 17:35 Beamer
 
SimplyMonk wrote on Mar 26, 2013, 14:26:
Beamer wrote on Mar 26, 2013, 13:45:
I don't get it. Are you trying to say Square Enix is a healthy company reporting a loss to pay less in taxes, laying off their CEO to make it look more accurate, and lost a third of their value on the stock market because, hey, why not?

Correct me if I'm wrong, but I think he is only saying that a loss of this size when they vast majority of the expenses are on restructuring doesn't necessarily mean that Square-Enix is in dire straits and doomed for bankruptcy. They can handle and most likely counted on this drop in stock price before they made the decision to restructure and are looking to recoup losses after them. Which also means that SQENIX could be a good buy if they restructure well.

At least that is how I interpreted the news and Creston's comments. Which is also the reason for my confusion on the President's resignation as this looks like a calculated plan rather than just bad decisions being made.

So you are correct... no company WANTS to be in this situation, but unless this repeats for multiple fiscals it really isn't that bad and just how publicly traded companies work. To answer my own confusion, maybe the President resigned to lessen the impact of the restructure costs and give the market a larger sign that things are changing for the better and their entire outlook from President down is changing for the better.

<shrug>

No, I agree. This doesn't mean Square Enix is circling the drain. They lost money in 2011. They will probably lose money in 2013. They have been successful every other year, have grown revenue, and have a good deal of liquidity. As I mentioned, 13 billion yen isn't a big deal when you have 110 billion in liquidity.

But that does not mean they didn't actually lose money. That doesn't mean they're pulling the wool over anyone's eyes, laughing their way to the bank. Companies can, and often do, lose money in quarters. Even in years. It's often not a big deal. Take a company like Bungie. Bungie is deep in the red right now. They're burning through cash with next to no income. Other times large companies make a huge expenditure, like perhaps building a new factory, or some huge R&D project. Other times it is more of a "fake" loss, where they make a huge write-off in one quarter.

But video game publishers, right now, are often losing real money.
 
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