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You can put anything up as an Asset on your balancesheet as MA does with CE2. How do you value that? I discussed this in my Q2 2009 Analysis. MA just hung up all the development cost for CE2 as an Asset on their Balancesheet which they depreciate against future returns. Now this is the right thing to do in accounting terms but what this implies is that MA have paid a lot of cash to get this asset and they need Cash to run current operations. How does it keep balance ?
correct, and we have discussed this already when the semi-annual report of 2009 was published. We agreed that this is a thing one can do but serves only to have a better looking balance sheet.
MA has simply ignored that their Cash outflow has greatly exceeded the cash inflow. Every kid with a savingsbox knows that this is not sustainable....
I don't think that they have ignored it. They decided to upgrade and to risk. Now this risk becomes evident and they do react. Please consider also that investment into CE2 was not financed with borrowed capital.
How can you keep running cash intensive investments if you can not balance it out with new revenues ? For a while you can hide those problems on your PnL statement but in the long run this is doomed for failure.
all depends on how things are going. Atm investment into CE2 did not generate enough revenue but it is noticeable that sales in 2009 did not decrease (recession!). Not sure what numbers we do get for 2010 but MA is for sure an interesting opportunity for a takeover.
Coming back to sales. I'm active since some years, accumlated quite some PEDs in inventory (about 50k TT), but did not deposit in the last 2 years and I'm very seldome online.
The reason is simple. There is not that much that I can do atm. The game is still the same as when I've started. I do absolutely dislike gambling and hence the loot ideology MA implemented is not what fits to me. So the real risk for MA is that when more than before will start to sell out.
I for myself gave them quite some time to see if things do change. Atm the dollar is strong and hence to sell out is something to consider for those here in Europe. Nevertheless, I personally don't have any intentions to do it. I do still believe that virtual economies will have a future and atm EU is still one of the fascinating ones.
They should however reveal more details (besides eye candy) about what their intentions are and make a clear statement about the gambling aspects of EU. We do already know how loot is distributed and implemented in terms of payout, but we still don't know if there is something like a personal loot pool, and this is an important information not only for persons that dislike gambling.
EU will have only a future if there are enough new players. New planets might help but we do already have an example that this might not work as expected. There is for example absolutely nothing that makes me visit Rocktropia. I don't perceive it as something were I do get any added value from doing it. A simple travel skill that has a use would justify travel expenses eventually. Hence my conlcusion so far is, that we don't need addtional loot opportunities but simply added value. This was also a main issue
here.