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från G5 Entertainments VD Vlad Suglobov, (20 nov 2006)
(VD kommenterar ett längre inlägg som är gjort på VCW, en
Engelsk översättning på inlägget saknas dock.)
Costs of going public and being public on Nordic OTC are small compared to
other exchanges. That was part of the reason why G5 chosen this exchange.
These costs only give minor effect on the profitability, and will become
invisible as we grow. The fall of profitability in Q3, as explained in the
report, was mainly caused by the unforeseen cancellation of the project.
Regarding M&A – we are discussing M&A with several companies, smaller and
comparable to G5 in size. In general, the size of the company doesn’t really
matter when M&A deals take place. A good deal is always a good deal. And a
deal is good when share price goes up and every shareholder wins, and
dilution doesn’t matter. If G5 could buy Ericsson for USD 100 million, I am
sure every shareholder would be happy to take the dilution.
The programmer cost quoted is surprising to me. In our experience average
cost for good programmer in Moscow is USD 1200. At USD 3000 you can hire CTO
for the company of our size. Of course there is tendency for salary growth
in Moscow, like any other developing country, but we passed the peak growth
around a year ago and now it’s stable. So far our price for customers grows
faster than salaries we pay – right now US publishers pay us budgets similar
to budgets they pay to US developers. Overall, we monitor the salary issue
and we plan to start Vietnamese operations in 2007 to further reduce the
costs.
Regarding profits in the value chain. We are talking to the number of
companies regarding M&A with G5. I must admit there are not many profitable
companies overall in the mobile field. One of the publishers we talked to
has revenue comparable to ours but losing almost the same amount every year.
Still, they placed very high valuation on them. Take a look at big mobile
publishers – you can’t find many quarters of profitability. As I can see
now, we are in the very right place in the value chain for making profits
out of the expenses of the bigger unprofitable publishers. Low-cost Moscow
development office is one of the reasons why we make profit where other
companies lose money.
I believe G5 is in the very right place and time with our mobile
development, and we are in a good position to expand to casual games
development for other platforms. I am running G5 for more than five years
now, and the company is growing every year. Right now G5 is in the best
shape during this period. I am confident in our future.
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