Looks like their war chest is actually 150 million...
They are looking at a £30 million loss a year later. It's fair to assume the war chest is around £120 million
£150 million - 30 million is £120 million?
All I know is my shares are gonna be worth shitloads in 3 years ;-)
They are projecting a loss of £30 million this year. This was their first announcement before the hurt started.
My view is simple. It's their first loss in a long long time. I see them surviving this fiasco. You guys are forgetting constantly that no one has refused to sell them games, they've refused to stock them as they don't want to agree to the credit terms put forward by EA, Nintendo and Capcom. UBI refused as well but quickly changed their minds.
If you think GAME won't be stocking FIFA 2013 then your the ones being unrealistic!
http://www.gamegroup.plc.uk/gmg_plc...p/interim-report-2011/interim-report-2011.pdf
Page 14:
Current assets
Inventories - 144,787
Trade and other receivables - 46,229
Current tax debtor - 10,597
Cash and cash equivalents - 40,964
Total - 242,577
Current liabilities
Trade and other payables - 133,562
Current portion of long-term borrowings - 109,241
Leasehold property incentives - 1,485
Current tax liabilities - 0
Total - 244,288
The "long-term" borrowings are the most worrying part, it means that their creditors are looking at moving in quite soon. We can also forget about the tax credits, Game need to show a profit to benefit from the £10m in tax credits they have built up and the inventory is mostly stock which depreciates quite fast. The biggest problem I can see is the debt coming due and there being no creditor willing to back them. In fact with just £40m cash on the books and a £110m of debt coming due I would be surprised if they lasted until the end of the next quarter.
As I see it Games true current assets are about £180m once the inventory is written down to a sane amount and the tax credits written off. If Game weren't such a shady company they would have a good chance of renegotiating their trade payables (to publishers) as a lump sum to avoid bankruptcy, but at this point publishers are so fed up with their shoddy business practices that they would probably rather see Game go bankrupt and reset the games retail sector in the UK and allow new competitors to fight out a £1bn consumer market.
Either way, Game are about £70m in the red. If Game are to survive they need to cancel the dividend (no company can give away 1.8p when the shares are worth 4p) and find an investor willing to buy new shares via an issuance of at least £100m to clear the debts that the company holds and allow Game to use part of their cash reserves to pay the publishers and get some new stock into their shops. They also need to start getting rid of low yield retail locations in expensive retail centres and busy high streets. They need to go back to their roots as a shop that people actually want to go to, it might mean lowering shareholder value (in the long term) but it would also mean they continue to exist into 2013/14.
Finding an investor willing to front up to £100m will be tough but not impossible. It just means the board are going to have to admit their failures of trying to turn Game into a mass market brand. It was never going to work. Games and gaming is still niche and right now Game offer nothing that HMV (or even supermarkets) can't or won't. Only that HMV and the supermarkets offer more competitive prices for new games and are easier to shop in without being hassled to buy a PSN card that I don't want or being "upsold" a CE/LE version that I also don't want, if I had wanted a a CE/LE I would have picked up a CE/LE.
Next up, Game have no digital strategy, a friend of mine was once asked to head up their digital division but he took a look at the strategy they had planned and told me they would go bankrupt within two years. That was late in 2010. Every media retail company needs a strong digital strategy. Game should have bought OnLive when they had the chance, it would have been risky, but given their retail power and publisher relations they could have made it work and changed the name to GAMELive or something like that.
On the idiot comparison to BP. BP still had a sound business which is extremely profitable and billions of pounds worth of assets they could sell for short term funding. I invested in BP at 340p In July 2010 and sold at 490p in January 2011 for a gain of £11,000. I even have money invested in RBS (a lot), bought at 19p, currently the shares are 26p, but RBS's underlying profits for the past 12 months were £6bn suggesting that they are extremely undervalued (even taking into account £20bn worth of EU related write downs to their asset base). That's the difference though, BP and RBS still have massively profitable core businesses and a hugely profitable business model. Game do not. They are in trouble because the board suck at their jobs and they have turned Game into shop that gamers don't want to go into.
Anyway, I would seriously recommend selling you Game stock and just crystallise those losses before March 31st.