"[QUOTE]["All they care about is pleasing there stockholders."

[Sammael99]

The problem is that most companies (and individuals) in America seem to be addicted to the quick money fix. High turnovers are all they want. Generating steady money for a long time is seen as unattractive.

This is the crux of the matter, IMO, and the recent internet craze has made things even worse : a lot of investors are now in the position where a 10 year away healthy profit is not considered a good investment. In the 80s and 90s, if your project was solid, you'd be able to find investors if that was the timeframe you were looking for. Nowadays, forget it. If it's not bingo in two years, you can pack and leave.

The worst thing is, the system seems to work against itself now, and is destroying value instead of creating it. One thing's for sure, I've stopped believing investors and stockbrokers know what they do.... They think they do, but they might as well be drawing Tarot Cards or rolling d20s...

 

[Darraketh]

As an investor I am more concerned with:
1. Long-term growth rather than short-term gains.
2. What the stock price will be when I go to cash it in than what it is day to day.
3. Annual dividend as opposed to stock price.

Remember the "Tortoise and the Hare?"


If Hasbro made a mistake in purchasing WoTC it is in buying a publishing company when they thought they were buying a toy company.

With a product that has proven longevity such as D&D I'd attempt a turn-around before I gave up on it, especially if it were at least breaking even. If my goal were to sell it I'd still attempt to improve profitability so that I could get a better price for it.

Personally I would have to think long and hard before I sold a property (D&D) that is the cornerstone and guiding force of an entire product category.

 

[TiQuinn]

But I don't think they should be lumped together. I think self-interest is fine, even if taken to wanting something better, but greed goes too far--you want FAR more than you need, and you will do whatever it takes at the expense of ALL others. I agree it is a subtle distinction, but I think a useful one. Capitalism works with self-interest, but if we all accept that greed is what makes capitalism work, then we will see a lot more Enrons in the future.



I am not convinced Enron/Worldcom are exceptional. Maybe exceptional in the degree to which greed was taken, but there are probably similar stories at all major corporations. Even WotC has had some irregularities...

There are similar stories in most households in America. How many people cheat on their tax returns? How many people spend more than they should given their credit card debt? How many people lie on their resumes to get a job? How many people have accountants who "creatively" manage their finances? Ever try to talk your way out of a speeding ticket?

Now suppose your household is a public company that has a million individual investors, and all they care about are that the earnings go up every year, and the dividends go up every year. Whenever you look at the bottom line of your 401K or your IRA and get upset when it's not doing as well this year as it has last year, you are...in a very small but crucial way...contributing to the reasons that some companies try to doctor their books or hide bad information. There's a fine line between greed and self-interest, and typically it's in the eye of the beholder. Right now, everywhere people look they think greedy and dishonest companies. However, what many of these companies are doing is not criminal, not negligant, and not deceitful.

 

[Taren Nighteyes]

Alright,

I have read through most of the posts on this thread and just want to add my 2 unasked for cents.

1. A public company's primary responsibility is to "create shareholder wealth". Short term, long term, it all depends on many factors including economic climate, type of business, and previous performance.

2. "Greed" is healthy, and a result of capitalism. It is cheating, stealing, and lying resulting from greed that de-rails the system.

3. WOTC made MILLIONS of dollars with Pokemon and MtG. When these two money makers declined, Hasbro is not only dissappointed with their investment/purchase in WOTC, but also needs to cut the unprofitable, and improve the profit margins on what remains. Hence - layoffs and the discontinuation of Chainmail, etc.

4. While long term growth and expansion is important, the current economic climate dictates the need for short-term profitability. Whenever there is a downturn in the stock market and economy in general, people want to see a positive return on the investment in the short-run, or they tend to bail. Sell sell sell, because it will only get worse or not better any time soon. Hasbro must satisfy the demands of the shareholders, or investors will leave for greener pastures. (Another good example is the Telecom industry, which generally has a decent long-term profitability, but short-term is pretty bleak - Note the investment community has bailed out of the telcoms for the most part!)

That about covers my input. Good luck to Hasbro/WOTC and may DND continue to evolve and grow!

Taren Nighteyes

 

[Kid Charlemagne]

The situation with Enron and Worldcom was not about breaking up companies and making profits from them. I don't know where that comes from. I don't think Worldcom could get near what they paid for their assets in todays market. Selling piecemeal would be a last resort for them.

The problem with Worldcom (and to a lesser extent Enron - I'm not as sure of their business model) is this: Worldcom's growth was almost entirely dependent on massive growth. This massive growth was entirely dependent on buying other companies and adding their numbers to Worldcom's numbers. This made Worldcom look like it was growing 30% a year, when actually they were just buying 30% more companies every year.

A couple of years ago, Worldcom ran out of companies to buy. They tried to buy Sprint, but that would have made a monopoly bigger than the old Ma Bell, so it got shot down in Europe and even in the the merger-happy USA.

Worldcom had never learned how to actually RUN a company. They knew how to build through acquisitions, but not through actually maximizing what they already had. The growth numbers plateaued, because there was nowhere left to go by buying things, and they didn't know how to actually run a business effectively under those conditions.

The CFO devised a scheme to fake the look of growth, and when that got found out, this is where we find ourselves.

The same thing happened to McDonalds, except for the faking part. With a McDonald's on every corner and in every town, it just isn't possible anymore for McDonald's to grow in the USA. That's why a huge portion of their profit for the past decade or more has come from overseas growth.

The same thing happened with Waste Management, the trash hauler. They bought up every US trash hauling firm they could, and when they ran out, their stock plummetted and they were bought out. They did try the faking route, BTW.

 

[Darkness]

...The fact that it will generate steady income indefinitely doesn't impress people. They want big numbers NOW. Hence the setting submission contest. They're generating interest. It's unbelievable free advertising. When the new setting comes out, there will be all kinds of buzz about it because we were all sitting around speculating about it for a long time, wondering what beat our submissions, hoping for a gaming renaissance. "For the players, by the players"...etc. They'll sell a lot of books/cards/whatever for a while, and the investors will be temporarily sated. Then the novelty of the new setting will wear off, sales will drop, and the grumbling of the parent company will begin anew.

That's the same idea that's behind all these "pop stars" tv shows that have begun to crop up in quite a few countries over the last few years... And it works, too...

 

[Darkness]

... With a McDonald's on every corner and in every town, it just isn't possible anymore for McDonald's to grow in the USA. That's why a huge portion of their profit for the past decade or more has come from overseas growth.
...

Heh. Amen to that!

I live on Vienna's possibly most important shopping street.

On the length of the actual shopping part of the street - which is a walk of about 10 minutes -, we have three MacDonald's!!! (One of them new; the other two have been here for 10+ years, I think.)

 

[Darraketh]

Okay I am officially disappointed in WoTC. You've got to read Monte's line of sight column.

In my mind it explains the whole moonshot reference made by, I believe it was, Ryan D.

Now it has been almost 30 days in the saddle. I hope these new guys are more realistic in their goals.

 

[buzzard]

Actually for all this discussion of greed and whatnot, a fundamental issue which causes some of these excesses is ignored.

You see, it is relatively easy to fake your earning report if you don't pay a dividend. If you actually have to pay a proportional dividend when making a profit, then the rubber is actually meeting the road. The accountability is inherent in those dividend checks.

However the wonders if tax law gets in the way. If you are Joe rich investor, you are likely is a fairly up there tax bracket (say 30%+). Dividends count as income so any share value which is returned to you as a dividend is taxed at this high rate. However capital gains taxes are taxed at a lesser rate (I don't recall the number exactly but it is the 20s). Thus it is in your interest to pick a stock which returns the value to its investors by trying to maximize share price.

Thus the boards of directors of many corporations are trying to satisfy their shareholders by doing things to maximize share price. This can consist of profits being folded back into the research or marketing. It can also lead to fraud as in the case of World Com.

Simply put dividends are an inherently more honest way of rewarding shareholders. They are also a self guarding system. However the fact that they are one of those double taxed sources of money (the dividend is taxed both on the corporate and shareholder end) makes it so that the tax sensitivity is very high. The best solution to the problem is to tax dividends at the capital gains rate (or heck, go wild and don't tax investments).

Buzzard (who gets these kooky ideas out of the Wall Street Journal)

 

[Vaxalon]

Just to throw the liberal end of it in, you could also tax the rich people (capital gains) at the same rate that you tax the poor people (income).

I agree that if the two rates were the same, we'd see more income shifted to dividends... but since that would require a tax increase for the wealthy, or else a debilitatingly low income tax rate, it won't happen.

Getting back on the topic of gamers owning stock in game companies, do we have any people reading this who know anything of the ins and outs of organizing such a thing? I'm talking about organizing a group of middle and upper-class gamers to invest in Hasbro in order to start influencing their policies with regard to WotC.