I just got finished skimming through the conference they held today.
Vivendi Universal Games is hardly a "cash cow". It makes money, but not a whole lot. With revenue of E794M, they show an operating income of E63M or 8% operating margin. That's only 1% of their 2002 revenue, and rather low operating margin compared to other divisions within the company (excluding the losers :)
The low margin is to be expected from a business that primarily relies upon retail sales. That's actually what could make it a reasonable target for divestiture, since it could easily take a decade to earn as much as the selling price could be.
On the other hand, it is such a small component of the total operation that they could almost look on it as something that they might as well keep around, since it wouldn't make much difference either way. I don't think that is likely to be the way that they will look at it, though. Their overall strategy seems to be more towards utilities and services.
I imagine that the success, or lack thereof, of online gaming may decide the matter for them, since the monthly subscription service seems to be more in-line with where they want to be. The game division certainly has no long term profitability to support keeping it, since it actually lost money in 2001. A big reason why 2002 was profitable was due to "Lack of restructuring in 2002", and reduced investment in that area.
Heh. I dunno, it doesn't matter a whole lot to me, except that I think it would be nice if someone picked up the game assets who whould light a fire under those guys.
-rcv-
Vivendi Universal Games is hardly a "cash cow". It makes money, but not a whole lot. With revenue of E794M, they show an operating income of E63M or 8% operating margin. That's only 1% of their 2002 revenue, and rather low operating margin compared to other divisions within the company (excluding the losers :)
The low margin is to be expected from a business that primarily relies upon retail sales. That's actually what could make it a reasonable target for divestiture, since it could easily take a decade to earn as much as the selling price could be.
On the other hand, it is such a small component of the total operation that they could almost look on it as something that they might as well keep around, since it wouldn't make much difference either way. I don't think that is likely to be the way that they will look at it, though. Their overall strategy seems to be more towards utilities and services.
I imagine that the success, or lack thereof, of online gaming may decide the matter for them, since the monthly subscription service seems to be more in-line with where they want to be. The game division certainly has no long term profitability to support keeping it, since it actually lost money in 2001. A big reason why 2002 was profitable was due to "Lack of restructuring in 2002", and reduced investment in that area.
Heh. I dunno, it doesn't matter a whole lot to me, except that I think it would be nice if someone picked up the game assets who whould light a fire under those guys.
-rcv-