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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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23. Re: Square Enix Reports Mar 26, 2013, 11:15 Xero
 
I actually forgot Square was a part of the Hitman release. I did hear good things about it... I wonder what's the dileo when good games are actually not selling... Did Square not market these titles well enough?  
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22. Re: Square Enix Reports Mar 26, 2013, 11:12 deqer
 
Maybe next time you'll pay him what he deserves, so he doesn't feel he's being taken advantage of and leaves.  
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21. Re: Square Enix Reports Mar 26, 2013, 11:10 nin
 
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?

On sale today @ amazon ($34.99 for steam code) - check OotB for the links I posted...

 
http://www.nin.com/pub/tension/
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20. Re: Square Enix Reports Mar 26, 2013, 11:08 Wolfox
 
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?
 
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19. Re: Square Enix Reports Mar 26, 2013, 11:07 Lorcin
 
I'm playing Ni No Kuni at the moment and it's way better then any JRPG Square have put out since FFIX.  
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18. Re: Square Enix Reports Mar 26, 2013, 11:02 NKD
 
Kajetan wrote on Mar 26, 2013, 10:52:
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

YEAH! You guys didn't buy enough Sleeping Dogs!!!!!!!!
No, you didnt buy enough Hitman and Tomb Raider. Both games are considered a commercial dissapointment. Which brings a smile on my face

The TR reboot is a failure. Nice!

Yeah fuck Square-Enix. Hopefully they'll shit-can those scrubs at Eidos Montreal to cut costs.

/sarcasm
 
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17. Re: Square Enix Reports Mar 26, 2013, 11:00 Verno
 
Kajetan wrote on Mar 26, 2013, 10:52:
No, you didnt buy enough Hitman and Tomb Raider. Both games are considered a commercial dissapointment. Which brings a smile on my face

The TR reboot is a failure. Nice!

That's too bad, I'm actually enjoying the new TR game. It doesn't really adhere to the series roots but I've been having a great time since I got over that.
 
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16. Re: Square Enix Reports Mar 26, 2013, 10:58 nin
 
Kajetan wrote on Mar 26, 2013, 10:52:
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

YEAH! You guys didn't buy enough Sleeping Dogs!!!!!!!!
No, you didnt buy enough Hitman and Tomb Raider. Both games are considered a commercial dissapointment.

According to Teh shack, so was SD...which is a shame, as it was an excellent game.

 
http://www.nin.com/pub/tension/
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15. Re: Square Enix Reports Mar 26, 2013, 10:52 Kajetan
 
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

YEAH! You guys didn't buy enough Sleeping Dogs!!!!!!!!
No, you didnt buy enough Hitman and Tomb Raider. Both games are considered a commercial dissapointment. Which brings a smile on my face

The TR reboot is a failure. Nice!
 
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14. Re: Square Enix Reports Mar 26, 2013, 10:43 Mr. Tact
 
InBlack wrote on Mar 26, 2013, 10:11:
Well that makes a lot of sense. You mention liquidity. So they have a lot of cash at hand, so if they use that to pay for their losses wont they have to make up for it somewhere else? (Like in worker pay cuts or whatever) What Im really asking is, is that cash just sitting there or is it part of the usual company cashflow?
I don't know the answer to your question. But I will say that corporate finances are a bit mind boggling. For instance, a huge corporation like GE, they don't keep enough "cash" on hand to pay their enormous employee payroll every two weeks. Instead they borrow money from banks to pay that. The idea being that they make more money using their cash in other ways (investments in themselves or other companies) than the cost of interest on the loan for their operating capital. Sounds a bit crazy to me, but it is in fact "normal" to operate like that.
 
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13. Re: Square Enix Reports Mar 26, 2013, 10:19 ASeven
 
InBlack wrote on Mar 26, 2013, 10:11:
Well that makes a lot of sense. You mention liquidity. So they have a lot of cash at hand, so if they use that to pay for their losses wont they have to make up for it somewhere else? (Like in worker pay cuts or whatever) What Im really asking is, is that cash just sitting there or is it part of the usual company cashflow?

Cashflow, assets, stocks, etc. The fincial capital of a company is never cash sitting there, it's made up of a ton of assets, financial or physical, that often are spread all over the company.
 
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12. Re: Square Enix Reports Mar 26, 2013, 10:17 ASeven
 
Called this long ago, I said either Square or Codemasters was next and I wasn't wrong.

Square-Enix is rapidly approaching THQ levels of a no return point. There are several factors playing against Square as well that may jeopardize their attempt at regaining solid financial footing.

-The FFXIV launch has truly proved to be a strong financial burden for Square. The botched release, then all the money they spent trying to redo the game has cost them dearly. This is the main factor in my opinion of throwing Square into the financial situation today. FFXIV has brought no revenues of note but has caused heavy costs that will be hard to recoup. They should have dumped FFXIV right after the botched release and not incur in extra, heavy costs to try and salvage it.

-The heavy focus on iterations and the diminishing quality of the FF games on consoles. All I've read about the latest FF was how linear it played and how terrible the ending was. This kind of flogging of their main series may have proven disastrous since FF sales are no longer what they used to be. There's been a markedly loss of consumer confidence on the FF series which is, to all extentes, the main bread and butter of Square-Enix.

-Mismanagement, something quite common to publishers, has bit them in the ass and will bite them again in the ass unless this restructure really fixed the structural problems that exists within all publishers.

At this point nothing short of a bloody miracle can save Square. If they can produce a FF game that sells as FFVII used to sell, they'll be in the clear for a while but I see no good ending for Square.
 
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11. Re: Square Enix Reports Mar 26, 2013, 10:11 InBlack
 
Beamer wrote on Mar 26, 2013, 09:52:
InBlack wrote on Mar 26, 2013, 09:31:
How do companies keep operating when they pile on loss after loss after loss? Or is this one of those fictive losses, the company is still seing a profit but its not on par with their projected growth numbers so its declared as a loss as a result?

It's a loaded question, but one that comes up surprisingly often.

No, it's not a fictional loss. Sure, some is depreciation, but there's a true operating loss going on. But huge losses aren't necessarily huge deals. Amazon ran at a loss for its first what, decade or so?

Part of it is helped by money. SE has 110.5 billion yen cash and cash equivalent on hand. That's an enormous amount of liquidity.

Part of it is helped by company value. Square inherently has value. It should be able to capitalize on this value. Others agree, so they'll invest. Square can therefore either issue stock, which is selling shares of itself, or issue debt, which is like a municipality issuing a bond. The company will issue debt of whatever cash, with a promise to pay it back with interest after a certain amount of time. If the company is just going through a rough patch it's a way to survive.

I don't know what it is about this board, but people seem to love claiming losses are fictional, even after the head of the company is kicked out for them. There's some conspiracy theory that these losses are all designed to cheat taxes, as if taxes weren't low to begin with, and as if CEOs wouldn't be rewarded if they could make a profitable company look less profitable in order to make even more money.

Well that makes a lot of sense. You mention liquidity. So they have a lot of cash at hand, so if they use that to pay for their losses wont they have to make up for it somewhere else? (Like in worker pay cuts or whatever) What Im really asking is, is that cash just sitting there or is it part of the usual company cashflow?
 
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10. Re: Square Enix Reports Mar 26, 2013, 10:04 Verno
 
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

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

To be fair Sleeping Dogs was a new IP and had some baggage due to its True Crime heritage and subsequent boot from Activision. It turned out to be a great game but often new IP is a long term investment, much like TV sometimes you need to give things time to find an audience. Other things can't really be made into an ongoing franchise, Darksiders from THQ is a good example of something that sold well as a one off but trying to iterate on it turned out to be a mistake.

I hope the Japanese side of the business picks up. Sadly their answer to their woes seems to be more overpriced iOS games and iteration within iterations (FFXIII-3, REALLY?!). They seem to lack strong project management over there too, FFXIII Versus has been in development hell for so long it's treading DNF territory. They also spend an ungodly amount of money on animation and video assets compared to other companies.
 
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9. Re: Square Enix Reports Mar 26, 2013, 09:55 zombiefan
 
$138 million dollar loss...and you still have to pay the CEO his compensation package for doing such a great job!!  
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8. Re: Square Enix Reports Mar 26, 2013, 09:52 Beamer
 
InBlack wrote on Mar 26, 2013, 09:31:
How do companies keep operating when they pile on loss after loss after loss? Or is this one of those fictive losses, the company is still seing a profit but its not on par with their projected growth numbers so its declared as a loss as a result?

It's a loaded question, but one that comes up surprisingly often.

No, it's not a fictional loss. Sure, some is depreciation, but there's a true operating loss going on. But huge losses aren't necessarily huge deals. Amazon ran at a loss for its first what, decade or so?

Part of it is helped by money. SE has 110.5 billion yen cash and cash equivalent on hand. That's an enormous amount of liquidity.

Part of it is helped by company value. Square inherently has value. It should be able to capitalize on this value. Others agree, so they'll invest. Square can therefore either issue stock, which is selling shares of itself, or issue debt, which is like a municipality issuing a bond. The company will issue debt of whatever cash, with a promise to pay it back with interest after a certain amount of time. If the company is just going through a rough patch it's a way to survive.

I don't know what it is about this board, but people seem to love claiming losses are fictional, even after the head of the company is kicked out for them. There's some conspiracy theory that these losses are all designed to cheat taxes, as if taxes weren't low to begin with, and as if CEOs wouldn't be rewarded if they could make a profitable company look less profitable in order to make even more money.
 
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7. Re: Square Enix Reports Mar 26, 2013, 09:48 wtf_man
 
nin wrote on Mar 26, 2013, 09:42:
namely Sleepings Dogs

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


Because I rather have Watch Dogs.

I'll probably pick up "Teef", though.
 
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6. Re: Square Enix Reports Mar 26, 2013, 09:42 nin
 
namely Sleepings Dogs

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

 
http://www.nin.com/pub/tension/
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5. Re: Square Enix Reports Mar 26, 2013, 09:36 Verno
 
Square-Enix has a pretty epic list of missteps lately but the Eidos portion of their publishing wing has been pretty solid for quality at least. The Japanese side of the business isn't making games I want to play, plain and simple. I'm a huge JRPG nut too so if I'm weary of their stuff it probably doesn't bode well. FFXIII was dreadful and their idea of iterating on individual titles is just too far IMHO. The latest MMO was a total debacle. There is no need for 200 million dollar FF budgets, they could do some pretty amazing things with old tech but it would mean the animation side of the company is sitting around or laid off.

How do companies keep operating when they pile on loss after loss after loss? Or is this one of those fictive losses, the company is still seing a profit but its not on par with their projected growth numbers so its declared as a loss as a result?

Credit and cash reserves most of the time. Often times investors and banks will lend more if they see positive growth or other signs that the company is just going through a rough period. Losses can be a normal part of doing business, sometimes you have a big write down or the economy is in the shitter for awhile.
 
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4. Re: Square Enix Reports Mar 26, 2013, 09:33 Xero
 
Sucks to hear that. I thought they backed some really good titles to publish, namely Sleepings Dogs and Tomb Raider, 2 of my current favorite titles I'm playing at the moment...

I'm not sure what's going on in the Final Fantasy world but just my opinion, I thought it lost a lot of steam years ago.
 
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63 Replies. 4 pages. Viewing page 3.
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