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TFW2005 Coverage Of Hasbro 2012 Q3 Earnings Call - Fate Of Transformers: Prime Series

Posted on 10-22-2012 at 11:55 AM by SilverOptimus under Transformers Prime
Transformers-Prime-Hasbro
Here we are with TFW2005 Coverage of Hasbro 2012 3rd Quarter Earnings Conference Call.

Unfortunately, no major future plans were told about our beloved franchise, unlike last time. The reason for this may have been NYCC 2012 where Hasbro revealed much of their 2013 plans. Profits are down 4% last quarter and Hasbro wishes to return the “U.S. & Canada segment” to historical operating profit margins in the coming year. You can read all about this thanks to the Press Release our 2005 Boards member Hot Shot sharing with us.

However, there are things not written in black and white… things that may not look that big nor create a heavy impact. However, these little things matter to us; The Fans. What was said at the call might potentially impact the current Transformers Animation Series; Transformers: Prime. What is it? Find out, after the jump.

At one point during the Conference Call it was casually told that Production Costs will get cut for Hasbro Hub related TV Shows. Later during the Q&A session a reporter asked Hasbro’s CEO Brian Goldner what was meant by that. The answer suggests a possible reason why we are getting only 13 Episodes for Season 3 of Transformers: Prime.

Question: Final Question… If you could just elaborate. You touched a bit on a prepared remark that I’m interested. You said you are reducing your production spend over the past several quarters… said due to efficiencies. Can you just elaborate more on that?
Answer: "Actually what we are saying is amortization has come down because ultimate revenue expectations have gone up. It’s one big driver on that. As we look at our ultimate revenue expectations for out programming because our performance we have on the television and digital distribution performance and revenue we are now expected to get from that programming; cross merchandising and program sales the amortization comes down."

Question: You’ve been reducing your program production cash..
Answer: "Yeah, yeah the cash spend you really have to do when you have a successful TV Series… In fact Hasbro Studios TV Shows has outperformed other TV Shows on the Hub by 74% rating with 4 of the Top 10 shows on the network right now. So as you look at great performance of TV Shows, you are able to produce fewer episodes in subsequent series than you need for earlier series. You know, kids love watching episodes over and over again but you have to add an element of newness but you don’t need to spend to produce entire new series again. You can add 13 episodes or a 26 episodes to a pool of 52 already produced Episodes. So therefore you are able to… with a success TV Series… produce fewer in a year. Overall, Hasbro Studios has greenlit over 800 half-hours of programming. We also still have several hundreds of half-hour programming that we are producing for the network and also looking at whether there are successful tv series we obviously then spend less per new series because we are able to produce newer shows."

... and there you have it folks. This suggests a possible reason why Transformers: Prime Season 3 is only 13 or 16 Episodes.

What do you think of this decision? Are you with it or against it? Do you think that having 52 episodes already for the show might also be a factor? Let us know what you think, on the thread associated with this news post.

We’ll see you next time on our next coverage, Keep it up with TFW2005 for the latest Transformers News.
Views: 8,081
miscreant
Rarrrrrrrrhgh! You're doing wrong.


...and now to actually read the report.
Soundwinder
Well, expected decline, that's reassuring, at least.

I wonder whether the decline was greater or less than their anticipated decline.
Aernaroth
It's also important to remember that 3rd quarter earnings are usually pretty low compared to Q2 and Q4, so it's better to compare year to year than quarter to quarter.

Looking at things from this perspective, they're doing a bit better than last year overall, though they've been much stronger in US/Canada than worldwide (though North America still makes up the majority of their sales). You can also see, not accounting for margin-based-decisions, an approximation of the correlations between their revenues and their profits. A one percent increase in revenues over last year at this time represents a nearly 20% increase in profit, meaning their operating profit was probably only 4-5% of their sales. That's a pretty low margin, I would say.

It seems like the big challenge, at least in the US, is that retailers aren't ordering as much, period, and are operating on a leaner inventory structure. This makes sense, I guess, if consumption isn't where they'd want it to be, as it allows retailers to react more quickly to changes in demand, and to decrease overhead, but it puts producers at a disadvantage not only in terms of bulk sales, but in their ability to leverage economy of scale in their production methods.

Games and preschool toys are an anchor around the neck of revenue (seemingly as usual), whereas Boys' division is a driving force, especially due to the recent Avengers movie and other Marvel lines.

Bot shots appeared to do well enough to worth mentioning, but the expected decline in TF sales likely relates back to this not being a movie year, and last year being one.
doomboy536
I've been doing some reading of reports recently, let's see what I can dig up...

Quote:
Net earnings for the third quarter 2012 were $164.9 million compared to $171.0 million in 2011
So net earnings are down.

Quote:
"We are delivering on the objectives we set for the year," said Brian Goldner, President and Chief Executive Officer. "The U.S. and Canada segment operating profits are improving to historical levels
Quote:
"In the all important fourth quarter, we plan to drive these and other initiatives with a significant increase in marketing support in an environment of significantly lower U.S. retail inventory. As a result, for the full year 2012, we continue to believe, absent the impact of foreign exchange, we will again grow revenues and earnings per share."
Quote:
U.S. and Canada segment net revenues were $774.5 million, an increase of 1%, compared to $764.6 million in 2011.
Quote:
Including the impact of foreign exchange, International segment net revenues were $524.1 million, down 7%, compared to $563.3 million in 2011.
Quote:
Entertainment and Licensing segment net revenues were $43.1 million compared to $46.3 million in 2011
Quote:
In the Boys category, net revenues decreased 12% to $471.1 million. MARVEL products continued to post strong year-over-year gains globally, which were more than offset by expected declines in TRANSFORMERS and BEYBLADE products.
Quote:
Net revenues in the Games category were flat in the quarter at $365.7 million. TWISTER, MAGIC: THE GATHERING, BATTLESHIP and Boys Action Gaming products, including TRANSFORMERS BOT SHOTS, continued to perform well.
Huh, Bot Shots is classed a Game rather than a Boys toy. Oh well.

Quote:
For the third quarter 2012, the Girls category net revenues increased 17% to $302.3 million. Several new initiatives, including FURBY and ONE DIRECTION product launched during the quarter while MY LITTLE PONY product, backed by global television, continued to deliver strong year-over-year growth as did EASY-BAKE.
Okay bronies, start your bragging now

Quote:
Net revenues in the Preschool category declined 5% to $206.0 million.
TL; DR EDITION

Quote:
Total net revenue 3rd Quarter 2011 - $1,375,811 millions
Total net revenue 3rd Quarter 2012 - $1,345,137 millions

US + Canada did well, international and the Hub not so much. Boys toys did badly, Girls and Games did well.
MetalicGrunt
Its funny how Hasbro included BOT SHOTS in the games category. Wonder what the numbers would have looked like if BOt Shots were included with Boys toys
UltimusPrime
They would make more money if they would just release cases with the figures people actually want.

Maybe a case that has 2 Airachnid , 2 Rumble , 3 Vehicons , and 1 Kup
PrimusVsUnicron
Well a least the bronies have something to brag about
QmTablit
Meh. Summer. Kids are outside playing (or should be, anyway). Doesn't mean too much.

Besides, Christmas season is coming up.
shroobmaster
I would've bought some toys if the darn toys actualy showed up in the darn toy stores y'know. :/

But hey the declines were expected weren't they? After all decrease always happens steadly during non-movie years.
minimaster
Quote:
Originally Posted by doomboy536 View Post
TL; DR EDITION
Thanks, that an awful lot of reading

Interesting to read, though you can draw some very troll-esque questions...
Ribieconvoy
Maybe I would have bought more toys if more toys showed up. The most we've gotten in my area is one case of Wave 2 voyagers and one case of wave 4 deluxe, nothing beyond that. Probably because (and I hate to be a broken record) the shelves are clogged with endless waves of Bumblebee merchandise. There are still Bumblebees from the first day Prime RID came out in my area that are sitting on the shelves.
Rodentus prime
Need to increase profits? Better release some more Bumblebees then...
Burnout
Quote:
Originally Posted by shroobmaster View Post
I would've bought some toys if the darn toys actualy showed up in the darn toy stores y'know. :/

But hey the declines were expected weren't they? After all decrease always happens steadly during non-movie years.
Yeah this^. the toys never hit past wave 2 in most areas and if any wave 3 showed up they were pounced on and only floods upon floods of bumblebees were left int he wake. Plus the reduction in sizes, the increase in prices its no wonder their damn profits were down. Cuple that with horrible time slots, changing time slots for the tv shows. Pick a time slot, stick to it and keep the shows fresh. Also keep a normal time for rescue bots, prime and dan vs since those are the only shows on the hub that seem to get ANY ratings.
Ai Megumi
Well I am glad we are getting new episodes at all.
Nightrain
Quote:
Originally Posted by Kusanagi View Post
Meh. Summer. Kids are playing vidya games. Doesn't mean too much.
Corrected
SHINOBI03
Profits of a weekly 25-minutes toy commercial are down? I wonder why.... oh, that's right! Because they don't give us the toys we want and if they do they tend to be in a terrible quality and thus no one buys them!
Ribieconvoy
Quote:
Originally Posted by SHINOBI03 View Post
Profits of a weekly 25-minutes toy commercial are down? I wonder why.... oh, that's right! Because they don't give us the toys we want and if they do they tend to be in a terrible quality and thus no one buys them!
Also, said 25-minute-toy-commercial didn't give us any new episodes whatsoever over the summer. It's a good thing they expected their sales to decline, because if they thought they'd go up with the quality of toys they've been putting out coupled with the hiatus, then I'd say they're crazy.
Aernaroth
Quote:
Originally Posted by MetalicGrunt View Post
Its funny how Hasbro included BOT SHOTS in the games category. Wonder what the numbers would have looked like if BOt Shots were included with Boys toys
Probably more or less the same. Avengers (and thus, Marvel) were the big drivers for boys' profit this summer, and Bot Shots would have added to the pile of loot, but the downside would have been games would likely have looked even worse, especially with what appeared to be a dismal failure on the Battleship front. Overall, you're just talking about classification, and the total performance would have been the same.

Quote:
Originally Posted by UltimusPrime View Post
They would make more money if they would just release cases with the figures people actually want.

Maybe a case that has 2 Airachnid , 2 Rumble , 3 Vehicons , and 1 Kup
I'm not sure what's more important for me to point out here: That Boys Toys (and Transformers) were still highly profitable, or that this post completely ignores a lot of the subtleties of case assortments and retail relations.



Sort of sad news, I guess, but understandable. The Hub was (and remains) a big expenditure for Hasbro, and I'm not sure they're getting the returns from it they wanted.
SHINOBI03
Quote:
Originally Posted by Ribieconvoy View Post
Also, said 25-minute-toy-commercial didn't give us any new episodes whatsoever over the summer.
That as well. Forgot the hiatus over the summer.
Gilgamesh
And now for the avalanche of people who didn't actually read the report* jumping to stupid conclusions.




*(The TFW coverage, not expecting everyone to go read the actual official report, as it's too technical)
SPLIT LIP
I love it when these threads about financial reports crop up, because it gives everyone on TFW a chance to show how they know absolutely nothing about how franchise management and financial reports work.
PlanckEpoch
Quote:
Originally Posted by doomboy536 View Post
Okay bronies, start your bragging now
Quote:
Originally Posted by PrimusVsUnicron View Post
Well a least the bronies have something to brag about
People were SERIOUSLY doubting the popularity and buying power of MLP fans? I could've told them it would be the case MONTHS ago.
GogDog
Quote:
Originally Posted by SPLIT LIP View Post
I love it when these threads about financial reports crop up, because it gives everyone on TFW a chance to show how they know absolutely nothing about how franchise management and financial reports work.
Truth condensed to its purest form.
SHINOBI03
Quote:
Originally Posted by SPLIT LIP View Post
I love it when these threads about financial reports crop up, because it gives everyone on TFW a chance to show how they know absolutely nothing about how franchise management and financial reports work.
I *did* study economy during the previous semester...................... I don't remember much though.
orangeitis
Quote:
Originally Posted by UltimusPrime View Post
They would make more money if they would just release cases with the figures people actually want.

Maybe a case that has 2 Airachnid , 2 Rumble , 3 Vehicons , and 1 Kup
I'm not sure that really reflects what people want.
UltimusPrime
Quote:
Originally Posted by orangeitis View Post
I'm not sure that really reflects what people want.
Those are the figures people are having issues finding.

Just saying.
cheetor71
If they brought the prices down instead of charging us more money for less toy......
Mechafire
I'm not so sure this is the reason for TFP getting only 13 episodes for its third season. Didn't Steven Melching say that 65 was the number of episodes that series usually get? If so, that sounds to me like they had the "season 3 only being 13 episodes" thing planned from the start.
sixsixty
Soo if a show is successful, you make less episodes. That sounds pretty Oct. 19th to me.
exclusacon
I think it has to do with the disaster GI Joe movies figs...TFs 3rd QTR...there never nothing in stores during that time....
Aernaroth
Quote:
Originally Posted by cheetor71 View Post
If they brought the prices down instead of charging us more money for less toy......
Then either retailers and/or Hasbro would have to make less per toy, meaning profits would be even lower.



Quote:
Originally Posted by sixsixty View Post
Soo if a show is successful, you make less episodes. That sounds pretty Oct. 19th to me.
It all depends on your objectives and what criteria you use to measure "success". Prime won some awards, and is reasonably popular, but I think it just hasn't translated into a verifiable increase in sales that justifies the cost of producing a lot of episodes, especially with a new movie on the way.
Optimus8404
I have one word as to why earinings are down: Bumblebee.
Too much yellow on the shelf. Even at Marshalls and TJ Maxx you can't get rid of this guy. Too many for DOTM and too many for Prime. Also bad marketing. Prime Cliffjumper gets killed early in the cartoon and now he's a shelfwarmer, and he's a great toy. Way to promote, Hasbro. We get Mudflap and Skids in DOTM and they aren't even in the movie. We get several non movie characters and again several Bumblebees. We get no Soundwave (deluxe or HA) which is a MAJOR character. No Wheeljack or Mirage, which are NEW characters. HASBRO WAKE UP! Bumblebee will never be Optimus Prime, he will never carry this franchise! You wouldn't make Laserbeak as a second to Megatron, would you (Although he isn't a bad character, he would have to come with Soundave or the other cassettes and we'd line up to get him)? Almost everywhere I go I'll ask fans and even store employees and they agree, too much yellow on the shelfs....
deliciouspeter
Hows about making your toy commercial (Transformers Prime) air when the toys are in the stores?
SHINOBI03
Quote:
Originally Posted by exclusacon View Post
I think it has to do with the disaster GI Joe movies figs...TFs 3rd QTR...there never nothing in stores during that time....
Lots of Supply (Bees + Non-show characters + low quality control), little to no Demand (in-Show characters + good quality).
SPLIT LIP
Quote:
Originally Posted by UltimusPrime View Post
Those are the figures people are having issues finding.

Just saying.
Airachnid may be shortpacked, but I'm pretty sure that everyone who finds one wishes it was harder to find.

Quote:
Originally Posted by Aernaroth View Post
Then either retailers and/or Hasbro would have to make less per toy, meaning profits would be even lower.
Which, for those not following, would be the exact opposite way of solving the problem.
Oracle_Aesir
I blame myself, I haven't been able to buy Transformers at my usual rate for a couple years due to a lack of money (that's changing soon though)
StayingInTheBox
Who needs fucking college, right?
I AM UNICRON
its time for a new show! the biggest problem for transformers is that it plays on the hub so not everyone gets to see it. i had to upgrade my cable package to its top tier just to be able to watch it. i'm sorry its just not worth the extra money to see it so i have canceled and gone back to where i was before. bring it back to cartoon network or the cw Saturday morning line up or both with the hub getting first run and the cw getting it a week or two later will equal more toy sales because a broader audience will be able to watch the show
Burnout
Quote:
Originally Posted by Optimus8404 View Post
I have one word as to why earinings are down: Bumblebee.
Too much yellow on the shelf. Even at Marshalls and TJ Maxx you can't get rid of this guy. Too many for DOTM and too many for Prime. Also bad marketing. Prime Cliffjumper gets killed early in the cartoon and now he's a shelfwarmer, and he's a great toy. Way to promote, Hasbro. We get Mudflap and Skids in DOTM and they aren't even in the movie. We get several non movie characters and again several Bumblebees. We get no Soundwave (deluxe or HA) which is a MAJOR character. No Wheeljack or Mirage, which are NEW characters. HASBRO WAKE UP! Bumblebee will never be Optimus Prime, he will never carry this franchise! You wouldn't make Laserbeak as a second to Megatron, would you (Although he isn't a bad character, he would have to come with Soundave or the other cassettes and we'd line up to get him)? Almost everywhere I go I'll ask fans and even store employees and they agree, too much yellow on the shelfs....
This RIGHT HERE**** WAKE UP AND READ THIS HASBRO!!!
combaticon164
Quote:
Originally Posted by StayingInTheBox View Post
Who needs fucking college, right?
lol, I dropped out to make about $40 grand more than I would as a teacher, sad but true.
Timesynch
It's obvious profits are down because Hasbro failed to give us more Bees.
Blue Meanie
Meh, they are holding relatively steady. I dumped my stock a while ago anyway. Glad I did with how they have been handling everything since the movies. I see it slowly declining over the next few years and then holding steady/climbing back up.
Grimwing
Well. that sounds like super syndication for Prime. Their planning to reair every episode on the hub infinitely until its no longer hitting the numbers.

My only concern is how stingy their going to wind up being with the third season
injecting that newness after tons of reruns. a four week break between new episodes can be painful.

Still Hasbro only has so much money, Their going to coast on the hub for the next year and put more resources into making the toys sell.
Man the average consumer is hard to beat sense into. Movie zombies.

I really want Hub to get beyblade metal masters. Its a really fun show, like gaogaigar with spinning metal tops. Besides that beyblade is a Hasbro property anyway. It's probably just some licenses with cartoon network that will expire in time.

Love ya Hub. Stay Quality.
madman1366
I'm rather amazed the sales were down so little seeing there has been so little to buy this year. Higher prices I'm sure offset much of the lower sales numbers in terms of dollars. Still, there was really very little to buy over this quarter.

With the 4th quarter's mean season coming, I'm sure Transformers will start to take off a bit. Though it still won't match up to previous years it shouldn't be anything unexpected but should still yield some nice profits all things considered.
BigMetalUnit
maybe the exclusives are not a good idea....if you had the mp line selling everywhere you would make more...especialy considering how overpriced toys r us is. if they allowed walmart and target to get in on the mps they would sell alot better. plus it does not help when american retailers are so out of touch today....to them everything needs some sort of gimmick. get more characters on the show and you cansell there figures.....putting out characters that are not on the show and most likely never will be wont sell as good as the characters that are seen on the show.....a real smokescreen or breakdown figure will sell much better than frenzy,rumble,hot shot,kup, or ironhide.
Hypershock
This is gonna sound like an angry fanboy, but i think it's because they're generally not making what we want.

No, hear me out! It's a lot easier to sell something cute to a little girl, plus the my little pony fandom is a very different entity than ours. Ponies don't have to look good three different ways (robot, alt mode, transformation), and theyre making missteps for us. they think making more simplified figures and reusing molds like there's no tomorrow will make up the money they used on the molds, and i think that's only true to a certain extent. I don't think they comprehend the sheer amount of indifference there is to characters like Bumblebee. People get tired of the same molds or characters over and over.

there's not that much that i have honestly been interested in over the past few months toy-wise. Toys need to grab people, to wow them and suck them in. The 2013 product line Transformers-wise was so underwhelming that i basically wrote off Transformers Prime as a line. They won't bring themselves business by making one good mold to ten crap molds. And yes, i understand that molds are expensive and they need to cut costs, but i think theyve proved they can make simpler molds that are also engaging and fun, yet the first deluxe wave of 2013 is almost exactly the same as the first wave of 2012.

Certain figures like Unicron i can write off as not essential to a mainline. But characters like Smokescreen you can tell will probably have massive kid appeal, and his only American toy next year will have the transformation difficulty of a Beast Machines Happy Meal toy. They need to cut costs, so do one of three things, Hasbro: 1. do less figures per wave, but make them great complex molds 2. keep the amount of figures the same, but simplify the molds 3.do a lot of repaints, with only a few new figures, but make them excellent.
Quote:
Originally Posted by madman1366 View Post

With the 4th quarter's mean season coming, I'm sure Transformers will start to take off a bit. Though it still won't match up to previous years it shouldn't be anything unexpected but should still yield some nice profits all things considered.
I disagree. Nothing on you, but they have no holiday lineup! The new figures coming out for the holidays are Kup, Rumble, and Skyquake. That's it. Theyre all good molds,but yet there will be almost nothing that hasn't been out for months. I'm not counting Generations, of course, but i believe that's not as widespread as Prime has become.
Smasher
It sure is hard to find the actual news that everyone is talking about here seeing as clicking on the "discuss" link omits the relevant phone call.

Continue: TFW2005 Coverage Of Hasbro 2012 Q3 Earnings Call - Fate Of Transformers: Prime Series Discussion on the 2005 Boards!

 
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