Company News IPLY hits 52 week low - investors fear

[Saint_Proverbius]

Tags: Interplay

It looks like <A href="http://www.interplay.com">Interplay</A>'s investors are starting to figure out something might be going wrong at the company, given the situation with the payroll, the benefits, the web site, and so on. Their stock, <A href="http://finance.yahoo.com/q?s=IPLY.OB">IPLY.OB</a>, has gone from openning the week at <b>6.5 cents/share</b> down to <b>4.8 cents/share</b>, which is the lowest it's closed at during the 52 week period.
<br>
<br>
Even the most stalwart of the investors over at the <A href="http://ragingbull.lycos.com/mboard/boards.cgi?board=IPLY">Raging Bull IPLY forum</a> are starting to get nervous, and some are bailing out. Here's <a href="http://ragingbull.lycos.com/mboard/boards.cgi?board=IPLY&read=937">one post</a> from <b>frymuchan</b>:
<br>
<br>
<blockquote>I keep trying to find out something but Interplay is like Fort Knox right now with giving out information. I called them today, just to see if someone would answer the phone. It took many, many rings and then a confused really young sounding woman answered the phone (I've spoken to her a few other times). I asked her what was going on with the website and she said she did not know. Then I asked her when it would be working again, and she said they must be working on it or something and told me to check back later, thinking it would probably be fixed soon. I'm glad that at least someone is working at Interplay (who knows what is going on there right now), but at least they have a receptioninst working right now. Supposedly earnings are going to be coming out on Monday. We shall see. Any news other than bankruptcy should help this stock out. </blockquote>
<br>
<br>
Actually, that's not true. I can think of several things about this company that can make the stock dip lower. Production freeze due to a lack of money, cancelling projects/lay offs, and things of that nature - which are all entirely possible.
<br>

 

[Rosh]

Repost from NMA:

I had said before that for someone to seriously invest in Interplay (ever since the Caen brothers took over), that someone would either have to be an idiot or really insane.

I guess I wasn't wrong.

 

[Sol Invictus]

People with a normal disposition of being non-idiots have some limited propensity to becoming idiots themselves every once in awhile. Greed is usually always a factor in some way for these normal, usually sane people to make the transition from non-idiot to total fucktard, and they stay that way until a sudden realization beckons (e.g. the bank calling up to tell you that you have no money left)

 

[Briosafreak]

Well the small investor replied:

OT: F.A.O. Odin over at No Mutants Allowed.

Hey Odin, thanks for quoting me on your board "One of them", I was pleased to finally make it, as us poor investors have been quoted quite a few times over their in recent times.

You say "Shocker!! I've got more and will soon post about it.... ". I look forward to reading it, (lol).

As for us pulling our hair out I can't speak for the other small investors, but I've accepted my modest loss and just want closure. Also pictures of a certain CEO locked in a certain Iraqi prison, they should re-open it just for him for crimes against gamers FOBOS has got to be worth at least 5 years for a start.

Hey i like the guy after all

 

[DarkUnderlord]

IPLY.OB has gone from openning the week at 6.5 cents/share down to 4.8 cents/share, which is the lowest it's closed at during the 52 week period.

Just wait until it hits 0.00 cents/share!

 

[Spazmo]

I had said before that for someone to seriously invest in Interplay (ever since the Caen brothers took over), that someone would either have to be an idiot or really insane.

That must be why SKR is still around--he likes the crazy ones.

 

[jimkirk]

interplay should be sold to another company there is no use for them anymore

 

[Anonymous]

I dont think another company has any use for them, either.

 

[Saint_Proverbius]

interplay should be sold to another company there is no use for them anymore

The problem with buying Interplay is that you get all of Interplay's problems along with any benefit from owning Interplay. A good chunk of Interplay's talent pool is gone, the debt still remains, and so on. You'd have to not only fork up the money to buy Interplay but also a good chunk of cash luring in new developers, paying off debt, and so forth.

 

[DarkUnderlord]

I think it goes to prove that in the gaming industry, there is no such thing as a successful company. By that I mean that you can't rest on your laurels and stop making good quality games. It's not a product like Coca-Cola that you don't have to modify and can just continue to pump out and milk indefinately. No matter how good you were in the past is irrelevant when it comes to the future. Franchises are also seemingly worthless if you look at the way some companies have tried to milk them. Ultimately, it's the game itself that determines its success, not what's behind it. A company that might have been successful for a number of years can fall very easily when they lose their edge.

... and there's usually no coming back.

 

[Capelworth]

The problem with buying Interplay is that you get all of Interplay's problems along with any benefit from owning Interplay. A good chunk of Interplay's talent pool is gone, the debt still remains, and so on. You'd have to not only fork up the money to buy Interplay but also a good chunk of cash luring in new developers, paying off debt, and so forth.

Yeah, any bid on Interplay would be determined by a cost-benefit analysis on the part of the potential buyer. If I were to play the role of the analyst attempting a cursory glance at whether I might be interested in buying the company, I'd look at a few of these things (using 4Q numbers amd roughing present value calcs on future income/libility for simplicity).

Current Assets/Liabilities
Some prepaid licenses and expenses may not be of any use to me, so I take away maybe half of that $819,000 and am left with usable current assets of $2,963,000. I also have property and equipment that I can either keep or sell at a value of $2,114,000. Reducing by everything that Interplay owes others in the short term, I'm left with ($9,554,000). If I then take out the advances that Interplay has received against future profitablility, I'm left with ($13,045,000). So I'm losing $13M from the start.

Employees
There are few employees left and they aren't necessarily the correct components for a single development team. We'll say that the average contribution is roughly equivalent to the average cost, which would mean that the value of the employees is roughly a wash. I'm still down $13M.

IP
Yeah, Interplay has a pile of old titles, but Titus wasn't able to sell them for more than $1.5M (otherwise, they would have sold them and recouped the guarantee from Interplay for a net profit). So we'll be generous and say that they're worth exactly $1.5M. Now, Interplay also has Fallout, Descent, and maybe Dark Alliance. The Descent name is old and only well-known to PC gamers, though the franchise does have potential in the console market. We'll say that the name sells 300,000 SKUs over the same franchise with a different name. I'm making $25/unit in revenue over cost (CGS) on games that we develop, publish and distribute over our baseline, which is an increase of $7.5M. However, there's a 75% chance that it's already included in the Vivendi deal, which reduces two-thirds of the revenue (publication and distribution) by 75% and cost by about 50%. That means that the name is actually worth about $6.2M to me. Present value might yield something more like $4M.

Fallout was a dismal failure in the console arena and appears to have little value there, however in the PC market, it might mean sales of an additional 500,000 units over the life of the franchise over a comparable original IP. However, it's already a partner product in the Vivendi deal, which means that it won't add revenue and economies of scale benefits to our publication and distribution units. It's worth $8.3M to me without a the ability to move it to console. Present value would probably be closer to $5.4M.

Dark Alliance is the heavy hitter, but Vivendi is telling us that Interplay doesn't have the rights, while Interplay tells us they do. If we give Vivendi's claim a weight of 75%, than we should only consider the value of Dark Alliance at 25%. Vivendi likely already has rights to publish/distribute, so we'll say that the Dark Alliance names means 1.5M additional units over the life of the franchise. However, since there's only a 25% chance that I can use it, and Vivendi has rights for the next release or two, I can only expect about $6.2M for it. We'll say that the present value is about $4M again.

So the total value of Interplay's IP to us is $1.5 + 4 + 5.4 +4 = $14.9 million.

Brands
The Interplay brand is valuable in the PC market, but not particularly so in the console market. The Black Isle brand is worth something in both. If, as a preliminary estimate, we say that each brand boosts the sales of the franchises I intend to utilize by 10%, the Interplay brands are worth around $1.4M to us (roughly adjusted to present value).

Total
If I intend to use just the Descent, Fallout, and Dark Alliance franchises and the Interplay/Black Isle brand name (selling the rest), I should pay around $3.3 million for the company today. That's a valuation of around $0.037 per share.

That (along with the substantial variance in the probability assessment that could--and probably should--scare away potential buyers) is why I don't want to buy Interplay stock right now at $0.048/share. Of course, my probabilities are highly subjective (I'm sure that many, if not all of the current investors would disagree). Changing those probabilities can have a substantial impact on valuation, so apparently with their estimates, holders of Interplay stock do feel that the probability/valuation of a sale makes holding the stock at $0.048 a good idea.

At this point, I believe that liquidation (and a share value of $0) far more likely than a sale of even $3.3M. I, personally wouldn't value the stock right now at more than a penny a share. And even at that level, the variance (risk) is far too extreme for me. One of the most difficult things to do as an investor is to sell at a loss in an effort to stop the bleeding. Somehow, a loss doesn't quite seem real until you actually put in that sell order for less than you paid. I know from experience that t's tough to concede defeat like that. However, I also know that cutting those losses can make a huge impact when you're looking at your net returns for the year. I've never taken a 100% loss on an investment, but I would imagine that it would be excruciating.

 

[Saint_Proverbius]

I think you're over estimating a bit on Interplay's brand name. In the PC arena, remember that Interplay released three games in a row back in 2001 that just really didn't work worth a crap due to bigs and missing features - Giants, SFC2, and Fallout Tactics. Other than Orion Pirates, I don't think Interplay's released a PC game since then that did anything. I really can't see a company buying Interplay and even remotely thinking of using it's brand name.

As for Black Isle, I'm not so sure it's that strong a brand any more either. What games has Black Isle released that made a decent amount of money that didn't also have the BioWare name attached on there? IWD? Without D&D and BioWare propping up the Black Isle name, I really can't see it being that big a deal to a company. Every time they moved away from D&D, they failed - TORN was cancelled and Lionheart was a disasterous seller. Heck, BIS doesn't even include the rights to the best selling games they published, now. About the only bright footnote you can add to Black Isle of late is that Interplay didn't slap the BIS logo on Fallout Enforcer.

Now, as for Dark Alliance - how well do you think it'd do without the Baldur's Gate brand propping it up? Or the D&D setting? I can see Atari thinking about buying them for this, but then again, Atari would have to deal with Vivendi's hooks.

Also, I believe Descent was ported to the consoles, but didn't sell well. I still loved Descent 3, though.

Interplay's basically ruined a lot of the names it used to have, including it's own name. That's one big problem with selling it. The name is more likely to get people to pass over the title when they see Interplay on there than to buy it at this point.

 

[Psilon]

Yeah, there was a PlayStation version of Descent. It didn't go over too well.

Also, don't forget that THQ (current owner of both halves of Parallax) will probably object strongly to any use of Descent or FreeSpace. BioWare wasn't the only bunch to sue Interplay over insufficient payments.

About the only Black Isle titles they could resurrect without being laughed off the Internet would be Fallout 3 and Stonekeep 2, which was also cancelled a long time ago.

 

[Rosh]

About the only Black Isle titles they could resurrect without being laughed off the Internet would be Fallout 3 and Stonekeep 2, which was also cancelled a long time ago.

They have been laughed off from the internet. Interplay.com is still down. Oh, wait...you were talking about the hypothetical situation that someone would consider buying up Interplay for the titles.

Speaking of laughing, there's a running joke about Fifi at Vivendi. Fifi was running out of the building after being laughed at for the price he was asking for Interplay.

"M'sewer, M'sewer...I'll throw in the Titus, too! Stop laughing!"