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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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43. Re: Square Enix Reports Mar 26, 2013, 14:47 Gadzooks
 
Hey Square... how is that "pride" in your games thing working out for you? You know, where you insisted on overpricing all your games, even the remakes/ports of them to things like iOS and Android. Maybe if you werent so "proud" of your products, and sold them for more competitive prices, a lot more people would be giving you money for them, thus preventing such "Extraordinary Loss" from happening.  
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42. Re: Square Enix Reports Mar 26, 2013, 14:26 SimplyMonk
 
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>
 
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41. Re: Square Enix Reports Mar 26, 2013, 13:45 Beamer
 
Creston wrote on Mar 26, 2013, 13:37:
And again, you seem to believe that the ability to write off literally everything and anything under the sun disappears once your company reaches a certain size, no matter what the actual tax laws say.

We've already had this discussion, so go right ahead believing what you want to believe, but quit it with your pathetic little snipes.

Creston

Creston.
Why, then, would most companies show a profit, not a loss, if they could just go "hey, look, we lost money, no biggie, tax us less!"
Why, then, would these same companies go into bankruptcy?
Why, then, would they lay off their CEOs and CFOs?

Seriously. You do understand how accounting works, right? You understand GAAP? Yes, companies do earn more than they report, which is why they usually keep their books in GAAP and non-GAAP. Same with people. Write-offs are a nice thing. Depreciation is a nice thing.
But do you know what else is nice? Having a stock that is increasing in value.

The simple fact that not many companies report that they show a loss should probably indicate to you that, typically, when companies report a loss it's not a good thing.

Square Enix has only taken an annual loss once before. They're virtually guaranteed to do so again. If this wasn't a true loss, why wouldn't they do this every year?

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?
 
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40. Re: Square Enix Reports Mar 26, 2013, 13:37 Creston
 
And again, you seem to believe that the ability to write off literally everything and anything under the sun disappears once your company reaches a certain size, no matter what the actual tax laws say.

We've already had this discussion, so go right ahead believing what you want to believe, but quit it with your pathetic little snipes.

Creston
 
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39. Re: Square Enix Reports Mar 26, 2013, 13:33 Beamer
 
Creston wrote on Mar 26, 2013, 13:24:
Agent.X7 wrote on Mar 26, 2013, 13:22:
You need to know accounting to understand what we mean when we say we are operating at a loss. On paper, our expenses are more than our profits. However, if I was really losing $7 to 11K per month, I wouldn't still be here.

What? That's crazy!

I don't know what it is about this board, but people seem to love claiming that losses are losses and what you describe is absolutely impossible, no matter what every CPA in the US says.

Rolleyes

Creston

And, again, Creston confuses the operations of a small, private business with a large, public company.

Some people kept claiming THQ was losing money on paper. Then it ran out of money and went out of business.

Whoopsies!

Here's a good indicator: if your CEO gets shown the door, you probably actually lost money. If you're running a business that doesn't really have anything to depreciate yet you're showing a huge loss, you probably are losing money.
 
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38. Re: Square Enix Reports Mar 26, 2013, 13:27 SimplyMonk
 
Agent.X7 wrote on Mar 26, 2013, 13:22:
You need to know accounting to understand what we mean when we say we are operating at a loss.

Oh. The Accounting points I understand all too well. The reason for him being "shitcanned" now when it appears that the extra expenses was a conscious decision that had to be made in order to eventually turn around those quarterly loses is the part I don't quite get. Its the politics I don't understand or maybe it is the shortsightedness of shareholders. I almost get the feeling that he wanted out and rolled his serverence pay into that that $100M restructure cost.
 
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37. Re: Square Enix Reports Mar 26, 2013, 13:24 Creston
 
Agent.X7 wrote on Mar 26, 2013, 13:22:
You need to know accounting to understand what we mean when we say we are operating at a loss. On paper, our expenses are more than our profits. However, if I was really losing $7 to 11K per month, I wouldn't still be here.

What? That's crazy!

I don't know what it is about this board, but people seem to love claiming that losses are losses and what you describe is absolutely impossible, no matter what every CPA in the US says.

Rolleyes

Creston
 
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36. Re: Square Enix Reports Mar 26, 2013, 13:22 Agent.X7
 
I liked the new Hitman a lot, and I loved the new Tomb Raider.

I run a small business, and we have been operating at a loss since we opened almost a year ago. You need to know accounting to understand what we mean when we say we are operating at a loss. On paper, our expenses are more than our profits. However, if I was really losing $7 to 11K per month, I wouldn't still be here. It's all about cashflow. In a small company like mine, our loss makes it hard to get a loan, but we can keep going as long as the cashflow is there. IN a large corp, the loss basically effects shareholders. The company usually isn't in danger of going under, but the heads of management can be shitcanned for not making anybody any dividends.

It's a bit more complex, really, but I'm not typing out an accounting course here.
 
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35. Re: Square Enix Reports Mar 26, 2013, 13:20 SimplyMonk
 
I just don't think I understand company executive politics enough. Just from the blurb it sounds like the company was actually looking to beat or at least match forecasts until they decided to do a $100M restructure in order to better fit the current market. Is that reason enough for resignation? You make a costly decision in the companies best interest and have to resign for it?

Is it perhaps that he should of done this change gradually of the last couple of quarters or pushed the costs into the next fiscal?
 
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34. Re: Square Enix Reports Mar 26, 2013, 12:37 Verno
 
Jerykk wrote on Mar 26, 2013, 12:31:
The problem is that AAA games have to sell a ridiculous amount to be considered a success. Tomb Raider sold over 3 million units in a month but it's still considered a failure. Apparently they thought it would sell 10 million or something.

Wow that's crazy. I wonder how much all of these companies are spending on marketing and development when 3 million isn't a break even point, I should go have a look at their financial statements. I share your concerns, SE makes great PC versions and puts real effort into QA and platform polish.
 
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33. Re: Square Enix Reports Mar 26, 2013, 12:36 Creston
 
This is what happens when you don't release a new Deus Ex game in a timely fashion, Square Enix!

Creston
 
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32. Re: Square Enix Reports Mar 26, 2013, 12:31 Jerykk
 
The problem is that AAA games have to sell a ridiculous amount to be considered a success. Tomb Raider sold over 3 million units in a month but it's still considered a failure. Apparently they thought it would sell 10 million or something.

Whoops, apparently they were expecting to sell 3 million units in a month but fell short. Still, 3 million in a month is a bit unrealistic for most games.

Anyway, this is disappointing news. Square/Eidos has released some good titles over the past few years and they've shown strong PC support. Hopefully their restructuring plans don't change this.

This comment was edited on Mar 26, 2013, 12:37.
 
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31. Re: Square Enix Reports Mar 26, 2013, 11:53 Kajetan
 
Wolfox wrote on Mar 26, 2013, 11:08:
Kajetan wrote on Mar 26, 2013, 10:52:
The TR reboot is a failure. Nice!

You're happy that the TR reboot is a commercial "failure"? Why?
I despise SE for their kind of "rape" guerilla marketing they tried on this re-boot. I despise this game for being an action sellout. I despise this game for being an exploitation game, where the main character is presented in cutscenes as a fearful vulnerable girl, and only seconds after this cutscene, the player is killing a whole battalion of enemies with this character. This is cheap and bad story telling. Its an exploitation of the franchise.
 
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30. Re: Square Enix Reports Mar 26, 2013, 11:47 nin
 
InBlack wrote on Mar 26, 2013, 11:45:
Isnt the Deus Ex IP owned by these guys? What tools, there is so much potential here....

Was wondering that as well - looking here it looks like SE bought/renamed Eidos? Not positive...

 
http://store.nin.com/index.php?cPath=10
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29. Re: Square Enix Reports Mar 26, 2013, 11:45 nin
 
At least I didn't pirate it!

Exactly. Obviously launch money is better, but any money is better than no money. And steam sales have shown that when a game is drastically discounted, sales can also go through the roof.

 
http://store.nin.com/index.php?cPath=10
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28. Re: Square Enix Reports Mar 26, 2013, 11:45 InBlack
 
Isnt the Deus Ex IP owned by these guys? What tools, there is so much potential here....  
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I have a nifty blue line!
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27. Re: Square Enix Reports Mar 26, 2013, 11:38 NegaDeath
 
As a longtime Square fan its a shame but not all the surprising. Their core franchises are stagnant, they have multiple IP's they keep on ice despite fan demand, and they had to develop an MMO twice just to get it in reasonable shape. All they have going for them right now are some quality western publishing efforts and the odd portable game that turns out decent.  
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26. Re: Square Enix Reports Mar 26, 2013, 11:35 Verno
 
Lorcin wrote on Mar 26, 2013, 11:07:
I'm playing Ni No Kuni at the moment and it's way better then any JRPG Square have put out since FFIX.

Ni No Kuni has some very clunky aspects (familiar AI is just awful) but still manages to be a great game despite that. One of my favorite games this gen, it's always nice finding a game that all of us can enjoy at home too.
 
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25. Re: Square Enix Reports Mar 26, 2013, 11:33 El Pit
 
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

YEAH! You guys didn't buy enough Sleeping Dogs!!!!!!!!


I sort of feel guilty. Bought the Limited Edition of SD for 7.50 GBP just a couple of days ago, so, as a cheapskate, I'm part of the reason why they're losing money.

At least I didn't pirate it!
 
Consoles? I owned two: a Pong clone and an Atari 2600. And that's it.
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24. Re: Square Enix Reports Mar 26, 2013, 11:19 Hellbinder
 
Changing game environment?

There is still at least one more generation of consoles to go with millions of buyers. there are phones and PSP Vitas and 3DS's. All of which would have large sales of old school RPG or story driven stealth action games.

They have such an awesome collection of titles and material to draw from that people will still buy in droves. was there really a need to do some massive restructuring? ( Parasite Eve is still about my favorite game of all time)
 
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