Do you read financial reports or financial news about the companies you work with?

[MichaelCorfman]

Just about a month ago the Rank Group shut down the Blue Square website and the associated affiliate program. Since then I’ve spent some time to research how this came about and what lesson affiliates can take away from what transpired.

The Rank Group bought Blue Square for £65.7m in January 2003 as part of an overall strategy to expand their business to include online gaming. There was a belief that online and land-based gaming would complement one another, and be a strategic component of their long term success.

A strategy of operating both land and online gaming properties can work very well. Companies like William Hill and Paddy Power are powerhouses in sports betting in both the land-based and online worlds. And in the bingo world the Rank Group’s Mecca Bingo land-based properties and online presence are both industry leaders.

But it appears that strategy only works when the land-based and online properties are in the same vertical. But Blue Square did not complement the land-based offerings of the Rank Group, so they’ve done poorly in that vertical online even though they’ve been able to do well in the bingo vertical. In fact, Blue Square lost £5m in the last six months of 2012 alone. And we all know what happens in a large business to a product that is bleeding money and is not in strategic alignment with the rest of the business. It might not be called a bankruptcy, but that’s really what it is.

You don’t have to be an economist to predict what had to happen. Anyone who looked at Rank Group financial reports for the last year and asked themselves whether a long-term relationship with the Rank Group around Blue Square made sense would have gone away shaking their head no. As an affiliate, a CPA arrangement could have continued to make sense, but a revenue share arrangement based on projected earnings into the future could be predicted to be a bust.

To me, there is a clear lesson to be learned. That is to take a little time to consider the companies you work with and find out what you can about their financial stability, and the financial stability of the business unit you plan to work with. Historically little of that information has been available to affiliates. But today affiliates are increasingly working with larger companies that provide financial reports to the public.

So for this week’s poll question I thought I’d ask if you ever look at financial reports or news of any of the companies you work with. If you have, be sure to share any actions you've decided to take as a result. And if you know of any recent financial reports or news you think will be interesting to fellow affiliates, be sure to share that as well.

[Doolally]

I should probably study things more closely and more often, however, I have in the past declined affiliating with a group due to the overall financial setup/well-being of the company. Especially with smaller operators, a little research into the financials can be worthy of a little time.

Looking at the company Directors and their previous track records can often highlight potential problems.

I'm not sure what it's like in other countries but in the UK, it's fairly easy to find out about even smaller companies affairs. All relevant details are held by Companies House and are available, in some cases for a very modest fee.

[Christiaan]

I never read any financial reports. But now I read this topic, I think I will in the future.

[universal4]

I don't really read the financial report perse, but I do pay attention to the reviews of those reports after they come out for some of the groups.

At times they have helped me decide to increase or decrease exposure so I guess I will vote Yes and that it affects my actions.

Rick
Universal4

[Moonlight Cat]

I'm not sure what it's like in other countries but in the UK, it's fairly easy to find out about even smaller companies affairs. All relevant details are held by Companies House and are available, in some cases for a very modest fee.

....not sure. For example - Playtech. Officially this is British company, they shares listed in LSE, but this company have very unclear structure and income sources. Sorry for my English, i hope you understand what i mean.

[edgarf76]

Fundamental Question. How do we get access to them if they are not on the Dow or Nasdaq?

[LukeC]

Fundamental Question. How do we get access to them if they are not on the Dow or Nasdaq?

If you look for the corporate site or investor relations plus the company name they're usually easy to come across. Most of the big companies are publicly traded. If they are private, then you wouldn't be able to get such a report.

[Voids]

You won't be able to get full reports try www.duedil.co.uk and stick some information in, you can normally gleam some information although unraveling some of the corporate structures is often a pain.