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Atari Financial State and the Future of STO

SystemSystem Member, NoReporting Posts: 178,019 Arc User
http://www.atari.com/dyncontent/atari/uploads/PR_ATAR_93010_Final.pdf

After reading over that report filed about a month ago it doesn't seem like STO is performing as well as expected.

It looks like they have a decline of revenue of about 60% with exchange rates from the same time last year. It also seems like their credit loan with Bluebay was extended because there was no way they were going to have it by 12/31/2010.

As of right now it seems like Atari has way to much debt compared to its assets and Atari is banking on the success of The Witcher 2 and TDU2. If sales faulter on those games I am afraid of what is to come with STO.

When the loan deadline comes up will those games be able to bank $40 million? They haven't spent the entire loan though so in reality about $30 million but still, can Atari bring that much in?

If anyone else wants to read over the report and discuss it I would love to hear your insight.
Post edited by Unknown User on
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Comments

  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I'm not Cryptic's biggest fan but you need to take this post down. This is blatant misinformation you're spreading here - that report says nothing of the kind and in fact talks about how STO and CO are driving their revenues as part of a strategy shift.

    Delete this please. You're reading what you want to read, not what it actually says. Your avatar alone destroys any sort of objectivity you may have on this matter, despite your offer to "discuss".
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I'm not Cryptic's biggest fan but you need to take this post down. This is blatant misinformation you're spreading here - that report says nothing of the kind and in fact talks about how STO and CO are driving their revenues as part of a strategy shift.

    Delete this please. You're reading what you want to read, not what it actually says. Your avatar alone destroys any sort of objectivity you may have on this matter, despite your offer to "discuss".

    Did you read the report? If they had not of extended the deadline Atari would not have been able to pay BlueBay, they didn't have the money. This also isn't a jab at cryptic specifically, but Atari their owner.

    They have been able to reduce their operating debt over the past couple of years but they are operation at a huge loss none the less. Also, what part of what I said was blatant misinformation?

    Bluebay extended the loan so Atari didn't dump their shares to raise money but so that Bluebay could have a few more months to sell off their shares of Atari.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    If anything, the report indicates the relative strength of Atari's online game offerings in terms of a significant increase in online game revenue vs. the previous fiscal year (40+%). The biggest online game Atari had on the market during that period was STO.

    Looks to me like STO is doing exactly what Atari hoped it would do - 1.) Bring in revenue, and 2.) lead their efforts to transition towards primarily online offerings.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    krako wrote: »
    If anything, the report indicates the relative strength of Atari's online game offerings in terms of a significant increase in online game revenue vs. the previous fiscal year (40+%). The biggest online game Atari had on the market during that period was STO.

    Looks to me like STO is doing exactly what Atari hoped it would do - 1.) Bring in revenue, and 2.) lead their efforts to transition towards primarily online offerings.

    This also hedges on the lawsuits against Atari, which don't look promising and the fact that if they cannot cover this debt in 2011 not a whole lot of investors would want to extend money.

    I am also entitled to my opinion but honestly wanted other peoples opinions on this as it is my best interest that Atari/Cryptic succeed as they already have my money and a LTS does not good when the game is closed.

    Even though they did increase online profits by ~40% but even with that their revenue still dropped around ~$30 million from the same period last year.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Not a pleasant reading, but since I don't have any financial tie to Atari or its subsidiaries, I couldn't care less. Also most of the points raised have nothing to do with STO.
    There is one interesting aspect thou. It indicates that the Online revenue of Q2 averaged around $2.2mil/month. Divide it by $15 and it totals 146k subs max CO+STO combined. However, since the Online section summarizes Subs ($15)+Digital distribution ($15-30+Quarter/Year/Lifer subs)+CStore that calculated 146k figure is far from reality. It is closer to 70-80k average subs CO+STO combined during Q2.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    http://www.atari.com/dyncontent/atari/uploads/PR_ATAR_93010_Final.pdf

    After reading over that report filed about a month ago it doesn't seem like STO is performing as well as expected.

    It looks like they have a loss of revenue of about 60% with exchange rates. It also seems like their credit loan with Bluebay was extended because there was no way they were going to have it by 12/31/2010.

    This is the misinformation part. They may have a cash flow issue but who doesn't in The Great Recession? This does not reflect on STO's performance at all, and your comment about "loss of revenue of about 60%" is clearly in their retail business unit (i.e. not Online where STO resides as clearly stated) and is misleading at best.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    The ways you misread that is so long, I don't have the time to cover it all as I'm gonna hit that sack.

    But I will discuss two things:
    1) Loan extension. You are reading too much into this. Even extremely profitable companies extend loans from time to time. Sometimes it is at the request of the loan holder. They have books to keep too and BlueBay may want that revenue in a quarter when they need it most. So it may have nothing to do with Atari at all.

    2) Health of STO. It says that revenue from their online division is up 616.7% compared to the same quarter last year. Since STO didn't exist as a revenue stream at this time last year, it makes me think STO is driving a good chunk of that increase (and Champions Online's move to F2P tells me that sub base was smaller than STO's). That seems to me a good sign Atari won't touch STO for the time being.

    Their revenue is up year over year. Looks like things are improving in France.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Pendra37 wrote: »
    Not a pleasant reading, but since I don't have any financial tie to Atari or its subsidiaries, I couldn't care less. Also most of the points raised have nothing to do with STO.
    There is one interesting aspect thou. It indicates that the Online revenue of Q2 averaged around $2.2mil/month. Divide it by $15 and it totals 146k subs max CO+STO combined. However, since the Online section summarizes Subs ($15)+Digital distribution ($15-30+Quarter/Year/Lifer subs)+CStore that calculated 146k figure is far from reality. It is closer to 70-80k average subs CO+STO combined during Q2.

    Without knowing the breakdown of player subscription types and the breakdown of subscription fee revenue versus C-Store revenue this is impossible to calculate with any sort of accuracy. STO isn't a blockbuster MMO title like WOW or even a single-family-dwelling-buster like EVE - we all have known that for months. Get what you want out of the game and if it ends up shutting down there was nothing you could have done about it anyway :)
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Pendra37 wrote: »
    Not a pleasant reading, but since I don't have any financial tie to Atari or its subsidiaries, I couldn't care less. Also most of the points raised have nothing to do with STO.
    There is one interesting aspect thou. It indicates that the Online revenue of Q2 averaged around $2.2mil/month. Divide it by $15 and it totals 146k subs max CO+STO combined. However, since the Online section summarizes Subs ($15)+Digital distribution ($15-30+Quarter/Year/Lifer subs)+CStore that calculated 146k figure is far from reality. It is closer to 70-80k average subs CO+STO combined during Q2.

    That was the part right there that I was referring to future of STO.

    In my opinion, BlueBay knew that they didn't have the money to pay them back and extending the deadline allows them time to sell off the assets they own before Atari does to cut their losses.

    I just reread my first post and will edit it, I didn't mean they had a 60% loss but that they had a 60% decline in revenue from the same time last year.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I just reread my first post and will edit it, I didn't mean they had a 60% loss but that they had a 60% decline in revenue from the same time last year.

    But they had a similar decline in expenses. The key is this:
    Online revenue, comprised primarily of subscription and digital distribution revenue, was €12.9 million – an increase of €11.1 million over the prior year.

    That means the Online division is healthy.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    But they had a similar decline in expenses. The key is this:


    That means the Online division is healthy.
    It does but that is because they are trying to move to a completely online division.

    http://www.atari.com/dyncontent/atari/uploads/Atari_CP_BlueBay_20101021_UKdef.pdf

    There is the proposal by Bluebay to sell some of their assets, by extending their deadline they have more time to sell off assets.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I just disproved that mythical figure in my post above yours. Seriously what's your angle? You're arguing for the sake of arguing. Multiple people have explained to you why this post is wrong. You're connecting dots that aren't there. It's like "The Voyager Conspiracy" or something.

    5 letter word, begins with T, ends with L.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    It does but that is because they are trying to move to a completely online division.

    http://www.atari.com/dyncontent/atari/uploads/Atari_CP_BlueBay_20101021_UKdef.pdf

    There is the proposal by Bluebay to sell some of their assets, by extending their deadline they have more time to sell off assets.

    But Atari was paid $700k for the restructure. I know of no company that pays you to refinance. That's why I think BlueBay requested the extension themselves.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I just disproved that mythical figure in my post above yours. Seriously what's your angle? You're arguing for the sake of arguing. Multiple people have explained to you why this post is wrong. You're connecting dots that aren't there. It's like "The Voyager Conspiracy" or something.

    5 letter word, begins with T, ends with L.

    I have no angle, I am just curious if other people have different views on this situation which they do and I wanted to hear them. I also am not a financial investor so I may have been reading the numbers wrong and wanted a debate on them, which I believe is what a forum is for.


    Commodore, that is true but $700,000 spent to be able to sell a few million makes sense to investors. The only thing I wanted from this post was a discussion about it and other opinions.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Reading numbers without understanding the meaning or implications behind them is not a good idea. To then throw wild speculation about the future of STO without even a clue as to how STO even fits into those numbers is an even worse idea.

    What the report did stress quite clearly, however, is an improvement in Atari's financial situation. More than halving the operating loss seems like a pretty solid, tangible improvement to me. And that seems to be a solid reason for a debtor to extend a loan, since they are going to make more on interest when Atari in fact seems to be good for the money by demonstrating an improvement in their financial situation.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Foxrocks wrote:
    Reading numbers without understanding the meaning or implications behind them is not a good idea. To then throw wild speculation about the future of STO without even a clue as to how STO even fits into those numbers is an even worse idea.

    What the report did stress quite clearly, however, is an improvement in Atari's financial situation. More than halving the operating loss seems like a pretty solid, tangible improvement to me. And that seems to be a solid reason for a debtor to extend a loan, since they are going to make more on interest when Atari in fact seems to be good for the money by demonstrating an improvement in their financial situation.

    Never said I didn't have an understanding of the numbers as I do, what I said was that I wasn't an investment analyst. The report also showed that Atari is moving towards more casual games which, unless huge success, don't bring in millions of dollars within a few quarters.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    http://www.atari.com/dyncontent/atari/uploads/PR_ATAR_93010_Final.pdf

    After reading over that report filed about a month ago it doesn't seem like STO is performing as well as expected.

    It looks like they have a decline of revenue of about 60% with exchange rates from the same time last year. It also seems like their credit loan with Bluebay was extended because there was no way they were going to have it by 12/31/2010.

    As of right now it seems like Atari has way to much debt compared to its assets and Atari is banking on the success of The Witcher 2 and TDU2. If sales faulter on those games I am afraid of what is to come with STO.

    When the loan deadline comes up will those games be able to bank $40 million? They haven't spent the entire loan though so in reality about $30 million but still, can Atari bring that much in?

    If anyone else wants to read over the report and discuss it I would love to hear your insight.
    STO's got a bright future.

    If you read the report, you'd realize that Online Revenues (which Cryptic primarily drives) are up 44% compared to last year - not declining as you put it. They are also working their way out of a loss (again contradicting your statements).

    Last year: 27 million USD loss NET
    This year: 9 million USD loss NET

    Atari cleaned a lot of house last year and many of the dividends aren't appreciated until this year or the next. This report only goes up to November of this year, before any gains from Neverwinter, the virtually guaranteed influx from Foundry users in STO, and the Champions conversion (which should be more profitable than its current paradigm). It also excludes this year's holiday spending.

    Compared to last year, this is phenomenally good news and bodes well for the company when they begin examining 2nd Half profits in the spring.

    Look at the shift of profits too, from online outlets (from 1st Half FY 2009/10 to 2010/11):
    1.8 million USD => 12.9 million USD
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Huntman, while you can see the numbers you've obviously misunderstood their meaning.

    Please allow me to explain.

    First, Atari's overall revenue is down. Yeah, big surprise. The entire world is in an economic recession. Atari's investors know this too, so they're not going to be freaking out about this.

    Second, Atari's in store sales are down. Partly because of the recession and partly because they are purposefully moving away from in store sales. So everyone knew that number would go down, because they already said last year that it would go down. Once again no surprise and nothing to be concerned about.

    Third, online sales are way up. If you take a look at Atari's online portfolio you'll realize that the majority of their online sales is coming from Star Trek Online, or do you really believe that Champions Online is bringing in a ton of money? Would they have switched to a F2P plan if it was? Perhaps you think that Deer Hunter Online is bringing in a ton of money? Please, just think about it for a minute. Star Trek Online, while not as big a money maker as all of us would like it to be, is still clearly Atari's largest single source of revenue.

    Let me repeat that: Star Trek Online is clearly Atari's largest single source of income.

    So this being the case what exactly do you figure are the odds that Atari will shut STO down? Be careful, you're going to be graded on your answer. :)
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Huntman, while you can see the numbers you've obviously misunderstood their meaning.

    Please allow me to explain.

    First, Atari's overall revenue is down. Yeah, big surprise. The entire world is in an economic recession. Atari's investors know this too, so they're not going to be freaking out about this.

    Second, Atari's in store sales are down. Partly because of the recession and partly because they are purposefully moving away from in store sales. So everyone knew that number would go down, because they already said last year that it would go down. Once again no surprise and nothing to be concerned about.

    Third, online sales are way up. If you take a look at Atari's online portfolio you'll realize that the majority of their online sales is coming from Star Trek Online, or do you really believe that Champions Online is bringing in a ton of money? Would they have switched to a F2P plan if it was? Perhaps you think that Deer Hunter Online is bringing in a ton of money? Please, just think about it for a minute. Star Trek Online, while not as big a money maker as all of us would like it to be, is still clearly Atari's largest single source of revenue.

    Let me repeat that: Star Trek Online is clearly Atari's largest single source of income.

    So this being the case what exactly do you figure are the odds that Atari will shut STO down? Be careful, you're going to be graded on your answer. :)

    The funny part is that Atari is doing better now (with no major game releases in the past few months) than they were just after Champions' launch and just before STO's launch (and, yet, STO is the main driving force behind Atari's sales).

    That's a pretty damn good setup and the company is recovering year-over-year - during a recession.

    With talks of Neverwinter, a more profitable Champions model than currently in place, and STO gaining more subs when Foundry releases (which any marketer worth his.her salt would capitalize on), FY 2010-2011 looks good. Even brick and mortar sales look good with The Witcher 2 (whose prequel sold very well considering it was a relatively unknown european company that has won critical and popular acclaim since).
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    The funny part is that Atari is doing better now (with no major game releases in the past few months) than they were just after Champions' launch and just before STO's launch (and, yet, STO is the main driving force behind Atari's sales).

    That's a pretty damn good setup and the company is recovering year-over-year - during a recession.

    With talks of Neverwinter, a more profitable Champions model than currently in place, and STO gaining more subs when Foundry releases (which any marketer worth his.her salt would capitalize on), FY 2010-2011 looks good. Even brick and mortar sales look good with The Witcher 2 (whose prequel sold very well considering it was a relatively unknown european company that has won critical and popular acclaim since).

    I guess I just see the bad in things, but can anyone tell me what happens when their loan is due? They don't have $30 million in assets and the loan holder is trying to sell its assets.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I guess I just see the bad in things, but can anyone tell me what happens when their loan is due? They don't have $30 million in assets and the loan holder is trying to sell its assets.
    I don't know the details of their loan and if extension terms and conditions were built into the agreement. That's speculation.

    What I can say is that even if Atari's progress reverses and the parentcompany goes under, STO (and Cryptic) would be one of the few profitable parts and thereby get scooped up rather seamlessly by another publishing firm. When I say seamlessly, I mean Cryptic has a lot of great properties and titles in development and are performing extremely well compared to their parent. This would increase demand for Cryptic should Atari fold. In the end, such things would bode well for Cryptic as the studio would have more ability to leverage a deal with the publishers. Everyone from EA to Activision-Blizzard to Warner Bros. Entertainment (which now owns Turbine) would want a piece.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I guess I just see the bad in things, but can anyone tell me what happens when their loan is due? They don't have $30 million in assets and the loan holder is trying to sell its assets.

    Whats the point in knowing that? Quite likely once the deadline comes the loan will be re-extended again.

    Debt doesnt mean that a company is in dire straits. While its a favorable situation to pay off any and all loans, there are some that stay with a company for a large chunk of its lifetime. Corporate loans aren't treated the same way as personal ones.

    That aside, do you really think Atari can't pay off $30 mill if they had to? There's no such thing. The loan terms would not be met if Atari's own worth in both physical and paper assets weren't worth that much.

    Stop this. You're still trying to see the bad in it.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    STO (and Cryptic) would be one of the few profitable parts and thereby get scooped up rather seamlessly by another publishing firm.

    This here is the core of it.

    Though the combined fairly solid 150k subscription cap between CO and STO - with the number definitely having to be smaller given how heavily STO has leaned on milking the C-store - is still kinda pathetic. It's only profitable because so little was ventured in the first place.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    I guess I just see the bad in things, but can anyone tell me what happens when their loan is due? They don't have $30 million in assets and the loan holder is trying to sell its assets.
    They'll pay it.

    Or at least enough of it to get an extension on the remainder. Two things you've forgotten.

    One, Atari may not have the money now, but they will be making money between now and when the loan is due.

    Two, it's in the best interest of the loan holder to extend the loan and allow Atari to repay it. If they force Atari to shut down they won't get their money back. If they extend the loan they get more money in the long run in the form of accumulating interest.

    Your lack of experience with how the business world works is causing you to see problems where none, as of yet, exist.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    They'll pay it.

    Or at least enough of it to get an extension on the remainder. Two things you've forgotten.

    One, Atari may not have the money now, but they will be making money between now and when the loan is due.

    Two, it's in the best interest of the loan holder to extend the loan and allow Atari to repay it. If they force Atari to shut down they won't get their money back. If they extend the loan they get more money in the long run in the form of accumulating interest.

    Your lack of experience with how the business world works is causing you to see problems where none, as of yet, exist.

    To add on to Peregrine's insights, Atari's improvement year-over-year is another reason they'd extend it too. They're almost assuredly going to pay off the debt eventually, thanks mostly to Cryptic keeping the company afloat.

    As for the developers of backyard baseball 2009, I can't say the same.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    To add on to Peregrine's insights, Atari's improvement year-over-year is another reason they'd extend it too. They're almost assuredly going to pay off the debt eventually, thanks mostly to Cryptic keeping the company afloat.

    The flipside of this is that Cryptic might well be doing better if it weren't being weighed down by Atari's incredible badness and debt load.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    The flipside of this is that Cryptic might well be doing better if it weren't being weighed down by Atari's incredible badness and debt load.
    Possibly. I wish it were that cut-and-dry. :)

    I'm not entirely convinced they could've avoided the same problems that plagued EA's and Sony's child studios, if they had gone with those bigger names. STO is incredibly well polished compared to some of those behemoth releases (and doing better than many recent MMO releases).
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    The flipside of this is that Cryptic might well be doing better if it weren't being weighed down by Atari's incredible badness and debt load.
    The executives at Cryptic sold a controlling interest in their company to Atari because the economy blew up and the bank stopped the line of credit that Cryptic was using to keep themselves afloat until Champions Online launched.

    So while, in theory at least, Cryptic would probably be doing better now if Atari didn't own them - except for the fact that they'd no longer exist if Atari hadn't purchased them.

    Also, Atari really isn't doing that bad. This kind of debt/income ratio is normal during a time when a company is undergoing a massive reorganization. Atari, formerly Infogrames, has an established working relationship with the institution that they've borrowed the money from. In short - the bank knows that Atari is "good for it."

    This thread is a perfect example of the downside of the internet. Individuals with no training and/or experience in the industry that's being discussed have access to information that they aren't equipped to understand. This is exactly why the internet is a huge mass of incorrect information, conspiracy theories and urban legends.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Ok, so the report say squad about anything really.

    What would tell me somthing however is a graph showing if there are currently an increase or decrease in players with monthly supscriptions.

    So they didn make as much money as they expected... Big deal? No... That is actually always expected within the first period of a game... When you launch somthing there is always a risk expected.

    Now we all know that a active supscription curve of STO would start out high, and then fall rapidly in the first 2 months... This is no secret.

    But what about the past 6 months?

    Now if the curve is steady or falling, YES then that would be a bad thing.

    But if it is rising slowly or rapidliy it is a good sign... The report you've shown here dosen't tell either, it is just useless numbers.
  • Archived PostArchived Post Member Posts: 2,264,498 Arc User
    edited December 2010
    Considering a new Startrek movie is confirmed and in the works. It would be silly to jump ship as an investor after how the last movie did. This time Cryptic could completely take advantage of the movie itself. If I were human I would make a "guess" marketing is going to go Warp factor 9 with advertisement of the game.
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