Supercell profit more than Kone, UPM. Nokia etc

[Marsh04]

While the news that they are making good profit and paying a lot of taxes is very positive, I suspect the reason their profit is more than many big names is that they haven't made tax arrangemnts to show lesser profits to avoid taxes like many other established businesses.

http://yle.fi/uutiset/thursdays_papers_ ... ro/8732558

[Marsh04]

So you believe that a company like kone is less profitable than supercell?

While you are right about the costs and operations I still highly doubt that they make lesser money than Supercell.

[Rosamunda]

Tax is a huge part of it. It would be very difficult for Supercell to avoid Finnish company tax while they are based here and their designers are all here. Their transparency is honorable but really, their business model does not give them many other options. The other companies you mention eg Kone (Starbucks, Ikea....) can more easily resort to transfer pricing, off-shoring, inter-company loans and all kinds of other financial mechanics to transfer profits to other countries. I guess one of the only things Supercell has to worry about is currency fluctuations.

But even for that sector (gaming) I think their net margins are super impressive. They are a lean organisation.

[Rip]

Yle:

According to Kauppalehti, Supercell was more profitable than telecoms giant Nokia, lift and escalator kings Kone, the forestry corporation UPM and paper product firm Stora Enso, all of which employ tens of thousands of people in countries around the world.

The linked Kauppalehti article make no such claim.
As a matter fact, the 2015 figures for KONE where:
Operating income, MEUR 1241
Income before taxes, MEUR 1364
Net income, MEUR 1053

(Supercell: operating income MEUR 845)

Obviously Supercell had far higher profit margins (hard to imagine those in a business where you sell big things made of steel and service contracts (with notable competitors), and Supercell productivity or any per employee figure are almost out of this world.

[wolf80]

Comparing companies of different sectors is like comparing apples and bananas. You can only compare Supercell to another gaming company.

You have to take into account:

growth potential: Much higher for gaming apps than for elevators. In principle every smartphone owner who plays games is a potential customer. New elevators are only needed in new buildings and when old buildings are refurbished. Gaming apps are cheap, elevators are expensive. Supercell makes it turnover by selling huge amounts of games.

development/research: Takes more time and money for elevators. In the gaming sector you put together a team of programmers and graphic designers, give them a computer each, and you are pretty much done. Development is fast, new products come out all the time. An elevator that doesn't work properly and doesn't sell would put be a catastrophe for KONE. In the gaming world it's normal that not every game is a hit. You just need enough hits to cover the development for all your bad games.

cost: Cost is practically completely variable for games, there are no fix-costs per item. After finishing a product you can sell it an unlimited amount of times.

and and and, doesn't stop there. For KONE the hig turnover comes from growing slowly (and is dependent on the building industry). Supercell landed several hits, some of which turned into short-term cash-cows. They grew fast, but without delivering hits constantly they could easily go down as fast.

[Rip]

Comparing companies of different sectors is like comparing apples and bananas. You can only compare Supercell to another gaming company.

For national economy it is comparison of euros vs. euros.

Supercell makes it turnover by selling huge amounts of games.

They sell no games. They sell extras to the free games, Many/most of their customers pay them nothing, some surprisingly lot. (edit: I forgot there is also at least some advertisement revenue)

[wolf80]

For national economy it is comparison of euros vs. euros.

You only can compare it like this if you don't care how the money was made, and if how much money could possibly be made the next years.

They sell no games. They sell extras to the free games, Many/most of their customers pay them nothing, some surprisingly lot.

In principle the same, especially if you compare it to an elevator manufacturer.