DracIsBack, on Wed Apr 21, 2010 8:46 AM, said:
goatdan, on Wed Apr 21, 2010 7:59 AM, said:
Here's the thing, Atari said that they had sold approximately 125,000 units of the system. They also said they had about 100,000 in inventory -- however, the inventory write off was for $12.6 million, and they state at the end of the thing here that the software and inventory was worth approximately $9.9 million dollars. To me, that means that they wrote off more than 100,000 Jaguar consoles that year, as if ALL of the systems AND software was worth $9.9 million, then that $12.6 million had to be at least 100,000 Jaguar consoles if not more.
Possibly. I took it to deal with the fact that they discounted the Jaguar heavily and consistently throughout the unit's very short life. Remember - it was $$250, $199, $149, $99 at various points. The catch phrase here is "write downs". Apply the same logic to games, where they were constantly dropping average selling prices. This includes not only what they sold new to customers but what was already in the channel by way of price protections, discounts, sales, rebates etc. etc etc.
No -- Inventory is worth what you purchased or manufactured it for, not what the sale price is. This is because of exactly what you're saying here -- if you spend $100 to make a Jaguar system let's say, and you can't sell them for $100, you take a loss on each system sold, and this is more or less a tax break then. You can -- and stores often do -- discount inventory to very low prices and then destroy the inventory to take it as a loss. For instance, if you make 1000 Jaguar consoles at $100 apiece ($100,000), and you decide that you won't be able to sell them for $200 like you had wanted, and it isn't worth the time to try to sell them at $100, you could write them off for basically nothing, get rid of them and take a loss on your inventory -- a "write off" -- of the excess inventory.
A write down is a readjustment of what they think they can sell, so my bet is that they "wrote down" (and off) the excess inventory at a loss, and kept the rest on hand really cheaply. Also, that particular filing was put in place shortly before (or during?) Atari's weird reverse merger with JTS, which had a stink all over it -- why would Atari reverse merge for such a small, small amount of money when a property or two of theirs -- like Tempest or Breakout -- could have sold for the same amount if not more?
That WHOLE deal was fishy, and I wouldn't put it past Atari to have been screwing around with the numbers to manipulate them the best way to make it look like the Jaguar was an even bigger failure than it was, and that it HAD to merge with JTS or face certain extinction.
I mean, that document recently came out stating how much they were willing to pay for licenses near the end. If less than 150,000 consoles had sold, and I can't find the original document now, but Atari was paying certain developers well over one million dollars for their release on the console. If it was a $1.5 million dollar release, that means that Atari was footing the bill for $10 per console to make the game. If the game sold to 33% of the consoles released (a HUGE attach rate), it would mean that Atari was basically setting themselves up for failure. And this same document had some things stated for the Jaguar CD, that if those numbers are to be trusted, Atari was willing to pay something like an average of $150 / console to get Mortal Kombat 3 on the Jaguar CD. Something there just doesn't add up.
All I'm saying is I would trust that particular document about as far as I can throw it. And since it isn't in my possession...
Edit -- Aha! Found it! With those totals, if it was true that they had sold 125,000 consoles, it meant that Atari that same year was committing about $200 / console for game development. And, while I do understand that better games mean more consoles sold which means more games selling in the future for lower prices, commitments -- before the cuts -- of approximately $200 per console that they couldn't sell at $200 makes absolutely no business sense. And paying nearly $1 million for licenses like NBA Jam TE for a console that according to the other document their total potential base would have been 225,000 (or more than $4 per *console*)...
Yeah, it just doesn't add up to me...
Edited by goatdan, Wed Apr 21, 2010 4:00 PM.