From NAB I flew over to Austin Texas for some Tex-Mex finance. I did a nice small class for some support folks in the EA Austin office. EA is always a great client to work with. Creative people like to learn how creative finance really can be. In some way we finance folks are kindred spirits to the game developers. Sometimes we can make any number work.
One of the key things we teach in our finance class is that accounting is as much of an art as it is a science. It’s always surprising to my non-finance students to learn this. There are not exact numbers especially when it comes to the income statement. To create an annual, quarterly, or monthly profit and loss (another name for income statement) an accountant must make hundreds if not thousands of estimates and assumptions to complete a statement. The key point my students understand is where the estimates are and how to ask the right questions surrounding the financial information they work with so they can make an informed decision.
I’ve taught this concept for years and often my finance and accounting friends challenge me when teaching this concept. In the end they always concede that there is no way to perfectly depreciate assets or perfectly estimate the allowance for bad debt to name a couple of the hundreds of estimates that go into these financial statements.
With EA I have been doing a quarterly conference call for those who have had the financial intelligence class. It’s a popular call to past attendees. In the call I review and decode the quarterly earnings call and press release. It’s been better to do these calls lately because EA is now really starting to turn its numbers up. For the first time in about 5 years EA is profitable on a GAAP and Non-GAAP basis. I like to say that Wall Street looks for 5 key numbers and the one that EA did really well with was cash flow. Now that EA is profitable 4 of the 5 numbers look good and guess what, the stock has doubled in the past 18 months. Things are looking good at EA now. The only key number that needs to improve now is revenue growth.
Trying to get home from Austin proved to be a challenge. Delta provided me with an extra night in the great state of Texas. I love the way they delay a flight one hour at a time until it’s cancelled at about mid-night. As a seasoned diamond medallion traveler I bailed out at 7:00 pm got a room and had a nice Tex-Mex meal and then got home on a two hour delayed flight the next day. Oh yes such is the life of a road warrior.