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GameStop is ‘lost at sea’ and its rosy outlook is setting it up for failure, analyst says


Jason
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What's ironic is that they bought a gold mine with ThinkGeek.com and then got rid of all the stuff that made ThinkGeek quirky and cool and flooded it with mainstream shit.

 

They still have a few neat things but they don't nearly have the off-the-wall obscure items they used to.

 

I don't understand why large companies buy successful businesses and then change everything that made that business successful in the first place. But then, I'm not a big corporate exec either.

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21 minutes ago, XxEvil AshxX said:

I don't understand why large companies buy successful businesses and then change everything that made that business successful in the first place. But then, I'm not a big corporate exec either.

 

More money for them when they have to lay people off and close all the stores.

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2 hours ago, Keyser_Soze said:

 

More money for them when they have to lay people off and close all the stores.

 

That's just it; ThinkGeek was an online only store. It didn't have brick and mortar locations until GameStop bought them. 

 

GameStop literally made it more costly than it needed to be lol.

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It's worth pointing out that the 3rd Quarter net loss includes "a non-operating, non-cash intangible asset impairment charge of $587.5 million, primarily related to goodwill and triggered by the sustained decline in the company’s share price".  Goodwill is an intangible asset that's the result of an acquisition amount over and above the total value of an acquired entity's assets and liabilities.  This is an illustration of goodwill:

 

Let's say a company has $20 in assets and $10 in liabilities.  This means the company has a book value/net worth of $10 ($20 assets minus $10 liabilities).  Gamestop buys this company for $20 which means that it pays $10 for the company's net worth and another $10 for the company's "goodwill" or the "intangible value" of the company that's not measurable by its net worth.  Every year, Gamestop's auditors determine whether that intangible asset retains its current stated value or if it has declined in value (known as an "impairment") and its value needs to be written down.  In the 3rd Quarter, the auditors determined that these intangible assets needed to be written down by nearly $600 million.

 

Without this goodwill impairment write down, Gamestop would've had net income for the third quarter of $68.3 million, an increase of 24% from Q3 2017.

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