Open letter to Wili Clip

Mr. Clip,

Let me start off by saying that you are right, ADS is worth a lot more than the present market capitalisation of the company, which is  8.2 million L$, less than twice the value of MRG.
So why is it that the price of the shares has been in decline for so long, with no end in sight. For the purpose of this letter I will assume that you mean well, for your company, its customers and shareholders.
Because if you don’t mean well for any of those three, and if indeed you would actually know that what you’re communicating is mostly nonsense, then there would be no hope. Not for ADS, not for its players, and not for shareholders.
So, I will assume that you mean well, and thus have an open mind for suggestions to improve things. And I think we will agree that things need to be improved from their current deplorable state. So, where to start.

Maybe we can also agree that ultimately, under modern capitalism, companies should strive to maximise profit, preferably in a sustainable way.
Probably you think that’s exactly what you are doing.

From the perspective of an average shareholder though, it looks like you forgot that there’s a difference between customers and shareholders. Management and shareholders play on the same team, and they have a common goal.
So how did we get where we are, with you treating your company forum as if it’s kindergarten, and shareholders persisting in asking questions that don’t get answered. I would say that is very frustrating for both sides.
More important though is the question how we can improve the current situation, where shareholders lost trust in the company management.

Maybe we can agree that at least in part the present situation is caused by poor communication and failure to produce transparent reporting.
As a consequence, shareholders think you confuse maximising salaries with maximising profit, and they think ADS management pockets millions of L$ every month while they get nothing.
You will agree that your current reporting can easily lead to shareholders thinking precisely that. There is an easy way out of the current mess, and it is not your “buy back program”.
Why not? Because that buy back program (in the eyes of your shareholders) only confirms their earlier fear, which is that you’re not interested in sharing. Maybe I should point you to the spelling of the word shareholder, it starts with “share”, and for a very good reason.

Of course, none of that is true, you are just making an honest effort to make ADS grow, and the company is investing most of its revenue, rather than wasting it on exorbitant management compensation.
Of course management makes financial sacrifices just like you are asking from shareholders.
The problem is dear Mr.Clip, ADS has not produced any Balance Sheet since longer than I care to remember, and has never produced anything resembling a CashFlow Statement at all. Moreover, your Income Statement is a mess, it doesn’t show any detail about what game earns how much money for ADS, and thus it doesn’t shed any light on how much additional revenue your investments in new products actually generate.

But, you will remember I said earlier the solution is simple, and it is. All you need to do is:

• start producing transparent reporting, so your shareholders can see what money goes where.
• recognize that you may be a brilliant games designer, but a lousy bookkeeper and hire someone to do it for you.
• admit that you may be a brilliant games designer, but you’re just as hopeless at “ïnvestor relations” as Amy, so hire someone to do it for you.

You will be surprised how fast the ADS shareprice will recover once those three issues are solved. You will even see that investors at Capex can be very forgiving with regard to dividend once they are shown the true figures, much to your surprise perhaps.

In short Mr. Clip, you have a choice. If indeed you mean well, you still have an opportunity to do the right thing and experience shareholders that are on your side instead of asking hard questions every day. A word of caution though, yes I think that opportunity still exists, but it will not last long anymore. If you mean well, it is now or never.

Of course having a choice means you can also choose to persist in lying to your shareholders and not answering their questions. I am not sure Capex will allow you to buy back all issued shares for a pittance, but you can be assured of one thing, the shame of having deceived so many people will never wash off again, it will stay with you for the rest of your life. Believe me, you won’t feel any pride about it.
Like I said though, for the purpose of this letter I assume you mean well, so we can safely discard this last option.

Looking forward to the light finally reaching you in your tunnel, hope you’ll be able to enjoy broad daylight again soon, without having to look over your shoulder all the time.

kind regards,
Marishka

N.B. If you wish to discuss this letter, it will have to be on my turf, there’s a “leave a reply” link right under this post. I will not play in your kindergarten.
Edit: N.B.2. I have been alerted by several people that my last sentence of this post can be perceived as a threat. I apologise for my poor wording, I never intended to threaten anyone.