Some beautiful music to read the blog with

Wednesday, 17 September 2014

Someone blundered - but asked politely for their ISK back.

I log in to see one of my alts with 2.3bn ISK in their wallet.  Not bad for one night.

But then there is also a mail waiting from a player - seems he blundered on entering a Buy order and my Sell order picked up the 1.2bn ISK or so extra:

and the current market backs this up:

Had this blunder gone silently i would have kept the ISK (and no doubt posted it on this blog).

However, to be fair to the player - he (i assume it is a he) did get in contact, was polite and there is no harm in attempting to reverse some of the loss.

So, the state of affairs is this:

  • i have a Sell order for 213m ISK
  • i get 1440m ISK
  • the player meant to do a Buy order for 144m ISK
  • the blunder in my favour benefited me by 1227m ISK (1440 - 213)
  • the blunder against the player hit him for 1296m ISK (1440 - 144)

So, i return 1.1bn ISK to the player and keep the other 100 - 200m ISK for myself to cover sundries like the sales tax (13m ISK) and a slap up meal at Miss Miggins Pie Shop (thats is a Blackadder reference).

Saturday, 13 September 2014

Watch for lowly priced sell orders outside Jita

I see this sort of thing quite often in trade hubs outside Jita.

Below are two items i was looking at where the cheapest Sell orders were oddly lower than the other Sell orders.  I was in Rens at the time.

The items were the Capital Core Defense Field Extender I and the Capital Drone Control Range Augmentor I.

In the case of the Capital Core Defense Field Extender I there were 2 Sell orders for 3 and 4 items, both at the same price and some 10m ISK below a very large Sell order.

In the case of the Capital Drone Control Range Augmentor I there were 2 Sell orders for 5 and 5 items, both at the same price and some 5m ISK below the next Sell order.

I am willing to bet all 4 of those Sell orders are from the same player and both invite further investigation.

Sure enough, comparison of the prices to Jita prices reveals a profit to be made.

In the case of the Capital Core Defense Field Extender i can buy the Sell orders out at Rens, ship them to Jita and sell them to normal priced Buy orders at 47m ISK (as shown below) getting about a 50m ISK profit in total.  The Jita Buy orders look normal so are very unlikely to be a scam.

In the case of the Capital Drone Control Range Augmentor I i can buy out the Sell orders in Rens and post them as Sell orders in Jita for about 15m ISK each (seems to be plenty of volume going through at that price as shown below) making about 60m ISK profit in total.

Hence a low risk 110m ISK profit less the 12m ISK cost of having Push Industries ship them all from Rens to Jita.

The beauty of buying from Sell orders that are materially lower than the established market average is that they tend not to be a scam (buy low, sell fair).

Wednesday, 10 September 2014

CCP Games - my stab at the 2014 to 2016 financial forecasts

On the back of the CCP Games half year results to June 2014 being out i have updated my forecasts for 2014 to 2016, which can be seen on this page in my blog.

That is a lot of numbers, i know.  So, in summary:

  • I suspect i am wrong mainly because i do note know 2 key things
  • Firstly, i am not sure what the ongoing Research & Development spend will be - i have estimated about $24m per year
  • Secondly, i don't know if CCP still has access to the tax credits from the US now that they have closed down World of Darkness (that brought in a few million $ each year)
  • Having said that i have Revenues going backwards in 2014 by 3.7% and then advancing onwards
  • I have CCP being mildly profitable
  • I have nothing in for Valkyrie revenues
  • BUT i still have them losing cash given the spend on Research & Development
  • Which means that their debt rises too far by the end of 2015 - that is why i think i am wrong!

So, lets look at the key questions i have and then below that i will show the summary numbers:

Question 1: the R&D (Research & Development) expense in the Profit & Loss account is all over the place given the prior spend on Dust and World of Darkness which is now over and has been written off.  Hence, i don't have a feel of what the ongong spend if for Eve Online and Valkeryie.  I have assumed about $23 - 24m though it could be as low as $16m given that was what was spent in 2012. Essentially i assumed CCP spends 30% of revenues on R&D.

Question 2: i don't know what the other one-off costs in 2014 were for closing offices etc.  If i knew those i could get a better idea of the underlying costs of CCP going forwards.

Question 3: CCP acquired a US company in part for the tax breaks.  I don't have a feel as to what the ongoing tax credits should be.

aside from that, I could do with more data on the number of subscribers.

That all said, the summary from my work so far is:

  • Revenues fall 4% in 2014 to $74m with Eve Online falling 6% offset by a fast growing China.  So 2014 would be the first revenue decline in CCP history.
  • In 2015 revenues grow to $78m and then $82m in 2016, i.e. 5% growth per annum
  • CCP makes a loss in 2014 of $23m mainly due to writing off World of Darkness for $24m (less any tax benefit).
  • In 2015 and 2016 CCP make about $1 - 2m per year.
  • Net debt rises to $18.5m in 2014 and then to $24m in 2015 and $29m in 2016
OK, i suspect the above is wrong.  My ongoing costs are likely too high.

If R&D was more like $17m per year (similar to 2012) reflecting ongoing Eve R&D and the development of Valkyrie then the above would look very difference.  Profits and cash would be would be $6 to $8m better in 2015 and the net debt would be falling.

I don't expect we will get an update from CCP until the 2014 accounts are out sometime in 2015.

In any event, i suspect the focus on keeping new players will be enhanced.  Getting a new player to enter the game is expensive enough.  Within other businesses keeping a new player through the steep learning curve is the prize - and i can't see Eve Online being any different.

Saturday, 6 September 2014

Eve Business Blogs - updated

I have updated my page that lists the Eve Business Blogs that i am aware of.  These are blogs that have at least a reasonable element that covers making ISK in Eve Online.

In total, i added 1 new blog - the eve industrialist

If anyone is aware of other Eve business blogs (any blog that has a reasonable element of making ISK in Eve online) then do let me know.

The list is also below (and on my blog roll >>>>):

1 A noob's tale in eve General Business Blog
2 A Scientist's Life in Eve Industrial Blog
3 Deep in EVE General Business Blog
4 Eve Bumbler General Business Blog
5 Eve Mogul General Business Blog
6 EVE Plex in 21 Days Trading Blog
7 EVE Simplified General Business Blog
8 EVE-fail Trading & Industry Blog
9 Evehermit Trading Blog
10 EvePLEX Trading Blog
11 Foo's Eve Musings General Business Blog
12 Fuzzwork Enterprises Industrial Blog
13 Greedy goblin General Business Blog
14 K162space Industrial Blog
15 Low Sec Lifestyle General Business Blog
16 Mabrick's Mumblings General Business Blog
17 Manufacturing Confusion Industrial Blog
18 Markets for ISK General Business Blog
19 Merchant Monarchy Trading Blog
20 Prosper: An EVE Online Tool Development Blog Industrial Blog
21 Spaceships & Spreadsheets General Business Blog
22 The Chronicles General Business Blog
23 The Eve Industrialist Industrial Blog
24 The Indecisive Noob General Business Blog
25 The Lazy Pilot Industrial Blog
26 tothebreach General Business Blog
27 Twenty five Tons of Heavy Steel General Business Blog
28 Vahrokh Vain General Business Blog
29 Valkrrs Eve Industrial Journal Industrial Blog
30 Yinmatook's EVE Wanderings General Business Blog

(For what it is worth, in its day the business blogs on World of Warcraft numbered many more though i notice there are very much fewer in recent times).

Wednesday, 3 September 2014

A new angle on Plex (perhaps)

In the CCP accounts there is a line in called Deferred Income.  In accounting terms, Deferred Income is where CCP has received cash but the sale relates to a future period.  A good example is someone who pays up front for 6 months of subscriptions - CCP will only recognise portion of the sale as each month passes.

Plex, i suspect, could fall into this camp:

  1. Someone buys plex for $15.  So the accounting entry is CCP receives $15 in cash and also has $15 Deferred Income (so far all Balance Sheet items);
  2. Then that plex is used to extend game time by 1 month so CCP then recognises the sale of $15 and cancels the $15 Deferred Income (so now CCP can recognise the $15 on the Profit & Loss account as revenue)
In the CCP accounts there used to be one line called Deferred Income but since the end of 2013 it is now split into:
  • Subscriptions
  • In-game purchases not yet consumed
  • Sale of goods not yet delivered

It is clear what "Subscriptions" is.  I am not sure what "Sale of goods not yet delivered" is - but it is a small amount so we can safely ignore it.  I greatly suspect "In-game purchases not yet consumed" are Plex that have been created but not yet used and/or Aurum that has been bought but not yet used.  I.e. Plex sitting in hangers or on the market for sale + Aurum that is sitting in peoples accounts.  Unless there is something else players can pay real money for?

Below is the relevant part of the CCP accounts:

Deferred Income 2012 2013 2014 H1
Subscriptions 3,964,814 4,359,823 4,297,855
In-game purchases not yet consumed 1,067,512 2,108,158 2,302,098
Sale of goods not yet delivered 198,376 137,791 52,214
5,230,702 6,605,772 6,652,167

If we focus on the line "In-game purchases not yet consumed".  At December 2012 it was $1.1m, at December 2013 it was $2.1m and at June 2014 it was $2.3m.

Now, if i make the rash assumption that Aurum is spent immediately it is acquired then the value of Plex in the game doubled during 2013 but has only increased by 10% in the six months to June 2014.  If i then make the assumption that the price of Plex is $15 (i know, there were discounts etc) then at December 2012 there was 71,000 Plex in the game, in December 2013 there was 141,000 Plex in the game and as at June 2014 there was 153,000 Plex in the game.

In some ways this does not add much to the debate on the price of Plex though it does suggest only a net 13,000 additional Plex were created in the last six months (= Gross creations of Plex less Gross usage of Plex).

That may mean holders of Plex have slowed down their buying (i.e. not so much of an increase of Plex sitting in hangers or on the market) or the creators of Plex have slowed down their creation (i.e. less people creating Plex by paying the $15).

Given the price of Plex has been rising i suspect it is the supply of Plex that has slowed.  I suspect that people buy the Plex to create the ISK and as the price of Plex gives more ISK then less Plex need be bought.

Unfortunately for us, there is not much narrative with the CCP accounts and so I can only make assumptions at this stage.  In the Prospectus issued in June 2013 there was much more detail.

Saturday, 30 August 2014

CCP Games Half Year Results - summary

CCP Games has released its Financials for the 6 months to 30 June 2014.

I have included a Page on this blog which has the CCP financials for the last five half year periods (which is as much CCP has told us).  The source is from the CCP Games website.

First thing to note is that the revenues are now almost entirely Eve Online.

Second thing to note is that the numbers are distorted by the termination of World of Darkness - and it is not so easy to strip all these factors out.

How you read these results really depends on if you believe Eve Online is seasonal or note.  I.e. is there a reason by the six months to June could not be compared to the six months to December.  Personally, i suspect not.

In Summary:
  • Revenues of Eve Online (including China) were $35.5m compared to $37.8m in the 6 months to December 2013 and $35.7m in the 6 months to June 2013
  • In other words, it looks like Eve Online went backwards in the six months to June 2014 (and the euro was stronger so would have benefited CCP)
  • Slight growth in North American revenues, if i strip out the benefit of a stronger euro then Europe was most likely flat, Asia (i.e. China) went backwards but i believe the agreement with the Chinese partner was changed in favour of the partner and sales to the southern hemisphere fell about 10%
  • The cost of writing off World of Darkness was $24.0m, compared to the cost of writing off Dust of $21.5m.
  • Other one-off factors include closing the San Francisco office and two company directors leaving (Joe Gallo [finance director] and David Reid [marketing director])
  • I don't know the other exceptional costs (costs of laying off staff etc)
  • That said, operating profits before the write-off costs were a $4.2m loss, compared to a $7.4m loss in the 6 months to December 2013 and a $0.5m loss in the 6 months to June 2013
  • Net debt (all borrowings less all cash) was $18.5m at June 2014 compared to $16.5m in December 2013 and $13.8m in June 2013
  • Net debt to ebitda (one of the covenants) rose to 1.2x (the covenant requires it to be less than 1.5x) compared to 1.0x at December 2013 and 0.9x at June 2013

I will write more posts on these results in the future but for me the key observation was that Eve Online seems to have gone backwards in the 6 months to June 2014.  That surprised me.  I don't have the data to see if the actual number of players has gone down but i suspect this may be the case.  The other explanation would be if the subscription prices went down.

One item backing this up is that subscriptions paid in advance at June 2014 were $4.3m compared to $4.4m at December 2013 - so more evidence of a slight decline.

Until i am able to get more information on what other costs were one-off in nature in the 6 months to June 2014 i will likely struggle to get a feel as to how 2014 will turn out.

Monday, 28 July 2014

A blunder averted

Well, the warning box worked this time.

I was updating my sell order for the item below and was about to enter one too few digits which would have resulted in a large loss of about 200m.

The old sell price was 111.878m and i was going to sell it for 11.872m.

Fortunately the warning box kicked in and saved the day.

i am noticing the warning box operating more frequently these days and i wonder if there has been a small coding change recently.

Saturday, 19 July 2014

A quick paper profit.

I saw this recently:

So, i am selling some Capital Sentry Damage Augmentor I's and up there is a sell order for 2 items at 30m each, way below the other sell orders.  There were no Buy orders.  And the sell order price at Jita is 58m and the Buy order price at Jita is 55m.

So, clearly this looks like a mis-posting.

I suspect one of two things happened:

1. the poster tried to sell some of the items at 30m to an existing Buy order which was unable to cover the full volume (i.e. a buy order to buy 3 of the item was up but the seller tried to sell 5)

2. or the seller in this case meant to post a Buy order for 2 items at 30m

Either way, i took advantage and bought the 2 items at 30m to repost later at a higher price.

Its a paper profit for now until i can sell the items and get that ISK into my wallet.

Saturday, 12 July 2014

June 2014 Update

As i now becoming quite common - I was away from Eve for over half the month again.  However, my wealth increased by 8.7bn ISK to 121.3bn ISK, which is an average of 279m ISK per day.  I had expected nearer 5bn - so not a bad result.

This month my holding in Plex generated 1.9bn of the 8.7bn growth in my wealth.  My Plex holding is 72 Plex worth 54.4bn.

Real life commitments at work has kept February through to June slow -having hoped July would be free i will now be on overseas business trips four times.

During these months i only sold the T1 items i manufacture and only traded other items where i made at least 15m ISK profits and 20% margins.

Going forwards that is changing to focusing solely on the T1 items i manufacture and only selling items that sell for over 100m ISK with 20% margins.

My strategy is to focus on low volume but high margin items that i either manufacture or buy (off sell orders) in Jita to sell in Dodixie / Hek / Rens / Amarr.

I don't have any standings of note - for this trading strategy saving a percent here or there is not key.  To reduce my costs of trading i have trained all my alts that post sell orders to Broker 4 and Accounting 4.

For those able to devote much more time to Eve, one way of reading this blog is to see how little time is required to generate sufficient ISK to plex your own account.

I have 2 accounts with 6 alts in total.
  • One one account: I have a trader at Dodixie and a trader at Hek which sell items that have been hauled there from Jita; and I have a manufacturer in the Lonetrek region that sells items in Jita and sends items to the traders in Dodixie, Hek, Amarr and Rens to sell.  This manufacturer also doubles up as my buyer in Jita.
  • On the other account: I have an alt that is getting into Planetary Interaction; I have an alt that is skilling up in Invention which currently sits in Amarr to sell the items manufactured by my Lonetrek manufacturer; and i now also have an alt that sits in Rens to also sell the items manufactured by my Lonetrek manufacturer.
All my hauling is done by third parties, namely PushX Industries - the time required to haul items from Jita to my traders in Dodixie and Hek would take up too much time.  Better to let these third parties do the hauling (for a fee, of course) whilst i am offline.  All my hauling is "Rush Jobs" and generally takes no more than 5 hours (often in under an hour) to haul from Jita to my four locations in Dodixie / Hek / Amarr / Rens (which are also the other trade hubs).  On average i pay 25m ISK per haul (so 100m ISK if i want to haul to all 4 trade hubs in one time) but it is well worth it given i can get those items bought in Jita onto the market in the other trade hubs very quickly and the hauling costs make up 1 to 3% of my sales price.  Not much given i aim to make 20% margins before all costs (hauling, broker fees, sales taxes).  I wrote a post on Rush Jobs which details why it is more profitable paying up.

I am now buying 1 Plex a month to finance my two accounts.  So, 750m ISK per month costs going forwards.  I do occasionally benefit from some kind soul upgrading their account having used the link to the right >>>>>>>>>

Plex: As of the end of June i held 72 Plex at a cost of 49.2bn ISK which at 756m per Plex was then worth 54.4bn ISK.  In other words, my holding in Plex has made me 5.2bn since i started investing in Plex at the end of February.

My biggest headache was that i was sitting on too much ISK which was not invested in the market.  I had up to 35bn ISK in my wallet which was dead money.  At most i need to hold 10bn ISK to finance my business, the other 25bn or so is surplus to requirements.

I know two things about that ISK.  Firstly, it will be there tomorrow with no chance of making a profit (or a loss).  Secondly, there is inflation in Eve so in effect it is not keeping up with the cost of living in Eve - in other words, its value to me in the future is lower than its value to me today.

So far, Plex is the best item i can find that (in the medium to long term) is the best asset to keep up with inflation in Eve.

However, during June i did not purchase additional Plex given i want to expand my trading business into higher value items and so will perhaps need the surplus ISK this month.

Dodixie trader: Life remains good and consistent

Items for sale fell to 14.3bn from 17.8bn which reflects me selling down my holdings in items valued below 100m ISK without yet replacing them with items valued at over 100m ISK.

I sell T1 manufactured items that my manufacturer makes in Lonetrek, and going forwards any other item that sells for over 100m ISK and makes a 20% profit margin.

This alt pays 0.80% broker fees to post an order and a further 0.90% sales tax on a successful sale.

There are no medium term goals for this alt – for now i will focus on the manufactured items from my alt in Lonetrek and selling expensive items hauled from Jita.

Training - this alt is training for missions.  Currently doing Level 4 missions.

Hek trader: Life remains good and consistent

Items for sale were flat at 15bn ISK.

I sell T1 manufactured items that my manufacturer makes in Lonetrek, and going forwards any other item that sells for over 100m ISK and makes a 20% profit margin.  Other than the manufactured items, there are very few common items i sell in Dodixie and Hek.

Pays 0.80% broker fees to post an order and a further 0.90% sales tax on a successful sale.  No longer training.

Amarr Trader: Back down to normal

Only really fully started up in mid December and focuses solely on items manufactured by my alt in the Lonetrek region.  During June this alt's sales were 6.0bn ISK vs prior months 7.1bn ISK and i suspect the profits were 2.0bn ISK vs prior months 3.0bn ISK.

Items for sale at the month end were flat at 11bn.

Pays 0.75% broker fees to post an order and a further 0.90% sales tax on a successful sale.  During the month i increased Accounting to Level 4 and Broker Relations to Level 5 to reduce those fees / taxes.

The main aim of this alt is to train up for Invention, and here the training goes on.  Needless to say, with being busy in rl this whole invention thing has been on the back burner!

Rens Trader: back also to more normal levels

Started just before xmas and also focuses solely on items manufactured by my alt in the Lonetrek region.  During June this alt made sales of 3.8bn vs prior month of 5.2bn ISK and i suspect profits of 1.7bn ISK vs prior month of 3.0bn.  Items for sale at the month end were flat at 7bn ISK.

Rens is a slower trade up so i did not expect to see great things - but being able to earn enough to buy two Plex per month is no bad thing.

I have no plans to expand into selling other items - i will stick to selling the items my manufacturer produces.

Pays 0.8% broker fees to post an order and a further 0.9% sales tax on a successful sale.

No longer in training.

Manufacturing alt: This alt does all my manufacturing from the Lonetrek region which is within easy access to Jita.  Not much has changed since November.

This alt sells its items in Jita and contracts to Push Industries to haul items to the traders in Dodixie / Hek / Amarr / Rens to sell.

I own 44 blueprints worth over 1bn ISK, most of which have already comfortably paid for themselves.

This alt may have plateaued at 6 to 8bn ISK sales per month for now though June was low.  During the month it made sales of 4.2bn (vs 7.3bn ISK in the prior month) and estimated profits of 2.0bn vs prior month of about 3.0bn ISK.  It currently has 9bn of sell orders, similar to May.

My expansion into manufacturing has been a great success so far.  I am now training this alt up to manufacture T2 items and i am in the process of manufacturing my third T2 item - lets see how it goes but so far T2 items are not as profitable for me as the T1 items.

And all this takes is 15 minutes update time a day.

The current near term goals is to find other T1 items to sell as well as expanding into T2 items.

I have seeded a new market in Lonetrek - lets see how that goes.  It is volatile at present - June sales were 1.0bn with profits of about 0.5bn compared to May of 1.5bn and profits of about 0.7bn ISK.

Planetary Interaction Alt: started training for Planetary Interaction.

This alt used to be my buyer in Jita.  He is now fully skilled for Planetary Interation and i am experimenting with it all for now.

Outlook: July is going to be real busy for me in RL (again!), hence i suspect i will be lucky to make over 5bn.  I have a holiday in the last week of June so it will be interesting to see how much i can make with some more time online.

Current Wealth:

Expected business purchases in the next 30 days
  • Plex x1 = 0.75bn ISK

I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost until i finally hold it as ISK.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what cost is or at least the maximum reduction I would need to make to my sell orders as a whole before they are sold.

Saturday, 5 July 2014

Someone blundered (perhaps), i gained (for sure)

This is another one of those posts where i was lucky enough to take advantage of either someone's blunder or a sale that did not complete - for former is a blunder, the latter is not.

In the image above one of two things has happened.  Either someone has decided to put a buy order up for 1 Capital Auxiliary Nano Pump but instead put a sell order up or someone has sold a bunch of them to buy orders which were not enough at the price specified and so one remaining sell order has remained up.

Eitherway, staring me in the face is the chance to purchase an item for 48m and put it back up to sell at 69m.

Promptly done!