An Update

500k out of 1billion is 0.0005%

or about noticing 50 cent missing out of $1,000.

Originally Posted by mauk2 Evil_Legacy became one of my favorite posters with two words. "Kick Rocks." I laffed so hard. Never change, E_L!

A good question to ask is, "Why is Brian Clayton & whoever else having in-depth discussions with VV when he / they know she's going to post up the summaries in the Titan Network forums?".

Or: why leak this kind of information?

hmmm.

That is a good question.

Originally Posted by mauk2 Evil_Legacy became one of my favorite posters with two words. "Kick Rocks." I laffed so hard. Never change, E_L!

OK, I forgot about "Book value".

Book Value is where you take the investments you've made in an asset, and every account period subtract some off for "depreciation". The depreciation is treated as an expense for the purpose of calculating profit and loss (thus reducing taxes).

I'd be shocked if the book value is very high. Unless you are running a loss on paper, you want to depreciate your assets as quickly as possible for the tax benefit. Unless they've got really incompetent accountants, any payments made to Cryptic during the creation of the game and the payment made to Cryptic to buy the game has been depreciated to zero long ago. The costs of developing the new project(s) probably are adding to the book value of those projects, but presuming that the sale would only be of CoH, not relevant. I suppose an auditor could dig in his heels and require NCSoft to book expenses for creating new issues as investment, but even so the money spent on bug fixing would be expensed as operating expenses and not add to the book value. The upshot is that I suspect the book value of CoH is very low. (Tabula Rasa and Auto Assault would have had significant book value.)

But ok, let's assume there's a million dollar book value for CoH. (Yes, I know they don't use the dollar in their accounting, but I'm an ugly American so will use my currency.) Let's assume they're able to depreciate 100K per year. And just for calculation, let's assume the tax rate is 25%. If so, then every year for the next ten year there's a 100K paper expense for the depreciation. reducing taxable income by 100K and thus reducing amount paid in taxes by 25K. So that's 25K in year one, 25K in year two (present value is 25K/(1+interest rate)), 25K in year three (present value is 25k/((1+interest rate)^2) ), etc. If 500K is pennies, what is 25K?

But instead, they sell for 500K. Book value is 1 million, so there's a paper loss of 500K. That means 500K goes into the account (no taxes on it because the transaction is a net loss) and they pay 125K less in taxes in Year 1. Even if you ignore interest, that's 625K for the sale (500K cash plus 125K in tax savings) vs. 250K for the pure write off (saving 25K in each of ten years). If you don't ignore interest, it's an even better deal. Plus, if they transfer Paragon Studios and had done the deal before everyone had actually lost their jobs (the people of Paragon Studios had remained employees for several weeks after the announcement, due to laws requiring advance notice of major layoffs), they wouldn't have had to pay severance pay and wouldn't be reporting all those firings which will raise their unemployment rate.

There is one caveat. Paper losses, depreciation, and other tax deductions are good if you are paying taxes. If there is no income, depreciation is just makes the loss bigger, and you can't pay less than zero in taxes. So let's assume NCSoft thought they would have a loss for the October-December quarter. The 500K paper loss doesn't give them any tax write-off. But it's still 500K cash for the sale compared to 250K lowered tax expenditures (and the 250K lowered tax expenditures are spread throughout ten years).

OK, I've probably bored everyone as much as I got bored in the classes (there's a reason I went into computer programming after graduation). But the suggestion that there's some tax writeoff advantage is highly unlikely. It would require a high book value for an 8 year old game, a loss in the quarter of the sale, and an accountant who doesn't know how to structure a deal so the loss is spread over several quarters.

Surely a good, biased, highly-assumptive reason can be imagined and tossed out at the people you criticize as being assumptive, biased, delusional blowhards!

The Electric-Knight ______ Malfaz _____ Zox'Oculox

@Zethustra

"Now at midnight all the agents and the superhuman crew come out
and round up everyone that knows more than they do"-Dylan

www.pauldamonthomas.com - Original Music

Highly condensed areas of population and acres of emptiness...
Unchanging weather...
Planes flying overhead every 10 minutes...
Roads where no one pays attention to anyone ELSE on the road...
Laughable notions of public transportation...

Yep, it's Arizona.

Michelle
aka
Samuraiko/Dark_Respite

Dark_Respite's Farewell Video: "One Last Day"
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I lol'ed.

Okay, here is my official announcement...

This just in... people are crazy!
News at half past twenty five!

The Electric-Knight ______ Malfaz _____ Zox'Oculox

@Zethustra

"Now at midnight all the agents and the superhuman crew come out
and round up everyone that knows more than they do"-Dylan

www.pauldamonthomas.com - Original Music

Ad that is back to the main question. What exactly IS the value and that is assuming they are not making payments to cryptic still, which probably by this time they are not unless there is something else written between them where they do.

And of course corporations tend to get very creative with this tax stuff and while on books it's may be 25% in reality they end up paying nothing by playing with those numbers. So it depends on how good their accountant really is. GE for example.

Then of course another thing that add value is how bad to buyers really want it. If I was selling a thing for 500k and the person buying it can easily turn around without any effort and break even and rake in about 1 million in profits that same year, that would seem low ball offer. If the buyer gets away with it, by all means, but if the buyer sees this, then it would seem that that the value of 500k is still too low.

For comparision I'm wondering what did NCSoft pay to get COX, when it was making about 27 million a year before expenses? Rumor of course said they paid a pretty penny, a penny that took about two years to recoup the costs based on soley what they raked in before the other expenses. So with the game making what about 3 million a year now, why would they sell it for less than a year worth of income for that game? Is the population dwindling? yes. Is it possible that players would not come back? Yep. There is risk. A risk that usually the buyers take. Did NCSOft know for sure they was going to be able to cover the costs in short amount of time? Probably not. It's an investment. At 500k it would basically be a gift to the buyer. Some deal you would give to a best friend or something. But then again, the IP might already be worthless, then there would be not much to gain on giving it away either.

While selling it gives instant money, 500k isnt much. They probably could save a hell of lot just by using the rights in future games instead of having to recreate it. One issue of COX release probably cost more than 500k over all to produce and with that ip comes 23 and a half of them. The work is already done. Work that NCSoft would then have to resproduce i nthe future if they get the need to whether it's ten years down the line or two years down the line or inserting Black Swan into Blade and Soul. If they sold for that little amount in the long run it would be a big mistake unless they are absolutely sure that unless hell freezes over they wont have any need for it.

Sitting a shelf to a buyer standpoint zero worth. It's just sitting there not generating income. To the person who bought it and have it, it might be worth more than zero just sitting there. Or else as I said earlier there would be no such thing as a discontinued product. Companies sit on IPs all the time. While we only can see their actions in the now, those guys are probably looking years into the future and wont intentionally put that future in peril over a few measly now bucks.

Originally Posted by mauk2 Evil_Legacy became one of my favorite posters with two words. "Kick Rocks." I laffed so hard. Never change, E_L!

Wait... is that Greenwich Miller Time?

Ah well.

Heck of a read though.

I believe it is just a bit after now (non-local out-of-time).

The Electric-Knight ______ Malfaz _____ Zox'Oculox

@Zethustra

"Now at midnight all the agents and the superhuman crew come out
and round up everyone that knows more than they do"-Dylan

www.pauldamonthomas.com - Original Music

nothing..15 days and counting.

They will have the community they always wanted.

No, the closest thing said to that is what I said.

Which is that 500k is a gift of an offer because all you would need is a few thousand players willing to buy a 1 year sub or lifetime sub at a low price.

That is just the most obvious failure to value the property. Just what is the value of the right to use the cryptic engine ? The unreal engine licenses for a ridiculous amount of money ?

What is the customer list and buying history worth on it's own ?

Some of us liked CoH the game. Not the "How hard can you kiss dev ***" game that was played on the forums.

\

For potential investors

And the fanboys feel the people that disagree with them are the trolls. You are a very cruel person Fansy.

My Grandpa told me a story once about the cruel ways of the upper staff in the Military. I think they had ranks but I'm not sure how many. I'm not militarized. Anyway! He used to say how he loved his M&M capsules, and buttered grits, he would eat them constantly even if they were under an attack with explosions tearing up roots and trees all around them. He said there is no important more a thing than making sure you fight on a full stomach, he said the M&M's gave him an adrenaline rush that would help him assault the enemy on a sugar high of epic proportions. The grits he said would warm up the body enough to keep the blood pumping mean, and pure. Pretty cool huh? I never liked grits, too gushy for me but even to this day Grandpa mushes it up with his lips like it's mashed potatoes. He loves mashed potatoes. OH right. Okay so, the Military people with high ranks would come by and take his M&Ms and eat them right in his face, then throw his grits into the enemy lines at times and this made Grandpa very sad, said that is why he called them cruel. Told me, '' Never be cruel and steal anyone's M&Ms' and Grits.'' (Quoted by Grandpa) Said that it's inhumane.