Kommentarer från G5 Entertainments VD Vlad Suglobov, (20 nov 2006)

(VD kommenterar ett längre inlägg som är gjort på VCW, en Engelsk översättning på inlägget saknas dock.)

Costs of going public and being public on Nordic OTC are small compared to other exchanges. That was part of the reason why G5 chosen this exchange. These costs only give minor effect on the profitability, and will become invisible as we grow. The fall of profitability in Q3, as explained in the report, was mainly caused by the unforeseen cancellation of the project.

Regarding M&A – we are discussing M&A with several companies, smaller and comparable to G5 in size. In general, the size of the company doesn’t really matter when M&A deals take place. A good deal is always a good deal. And a deal is good when share price goes up and every shareholder wins, and dilution doesn’t matter. If G5 could buy Ericsson for USD 100 million, I am sure every shareholder would be happy to take the dilution.

The programmer cost quoted is surprising to me. In our experience average cost for good programmer in Moscow is USD 1200. At USD 3000 you can hire CTO for the company of our size. Of course there is tendency for salary growth in Moscow, like any other developing country, but we passed the peak growth around a year ago and now it’s stable. So far our price for customers grows faster than salaries we pay – right now US publishers pay us budgets similar to budgets they pay to US developers. Overall, we monitor the salary issue and we plan to start Vietnamese operations in 2007 to further reduce the costs.

Regarding profits in the value chain. We are talking to the number of companies regarding M&A with G5. I must admit there are not many profitable companies overall in the mobile field. One of the publishers we talked to has revenue comparable to ours but losing almost the same amount every year. Still, they placed very high valuation on them. Take a look at big mobile publishers – you can’t find many quarters of profitability. As I can see now, we are in the very right place in the value chain for making profits out of the expenses of the bigger unprofitable publishers. Low-cost Moscow development office is one of the reasons why we make profit where other companies lose money.

I believe G5 is in the very right place and time with our mobile development, and we are in a good position to expand to casual games development for other platforms. I am running G5 for more than five years now, and the company is growing every year. Right now G5 is in the best shape during this period. I am confident in our future.