A couple of weeks ago, I posted a piece about the new wannabe entrant into the handheld gaming market, “Gizmondo - Do They Know What They’re Doing?“. My conclusion was that they probably didn’t:
It seems to be a so-so product (let’s be charitable), launching into an incredibly competitive market, with entrenched, strong incumbents and trying to do so at a premium price, with a model that forces you to watch 3 re-hashed TV commercials every day.
But that hasn’t deterred the management from announcing yesterday a Nasdaq listing.
So in Part 2 of this post, I’ve been doing a little digging into the management’s track record so far, alerted by a post on Gadget Guy. It’s turned up some very interesting finds. I don’t even need to comment, as the content of their annual report available on the Securities and Exchange Commission website says all that needs to be said.
Just remember that this company pays its Directors well, by any standards, bearing in mind that the launch of Gizmondo has only happened in one market (the UK) and hasn’t exactly been a spectacular success to date:
In 2004, Michael W. Carrender (CEO) earned $ 1,266,783
Carl J. Freer (Chairman) earned $ 1,075,684, a bonus of $ 1,123,850 and stock awards amounting to a further $975,000, plus other compensation of $279,516.
Steve Carroll (CTO) earned $ 1,020,580, with stock awards of $ 1,492,587
Bo Stefan Eriksson (Director of Gizmondo Europe) earned $867,465, a bonus of $ 1,365,456, $884,024 stock awards and further compensation of $104,095
Tamela Sainsbury, the corporate secretary of Gizmondo Europe, is the co-habiting partner of Steve Carroll, a director of the Company. In 2004, Gizmondo Europe paid Ms. Sainsbury $149,844 in base compensation, other compensation and bonuses of $82,954 and provided her with a luxury automobile valued at $69,108 at the time of acquisition. In addition, in 2004 the Company issued Ms. Sainsbury a
total of 160,681 shares of the Company’s common stock valued at $467,213. Ms.Sainsbury’s base compensation for 2005 is $192,777.
In September 2004, Northern Lights Software Limited (”Northern Lights”), a company registered in the United Kingdom, and Gizmondo Europe entered into a License Agreement, pursuant to which Northern Lights licensed the games Chicane and Colors and provided software development services to Gizmondo Europe. During 2004, Gizmondo Europe paid Northern Lights a total of $3,513,000 under the License Agreement, which amount was invoiced during the regular course of business. Carl Freer, Chairman of the Company’s Board of Directors, and Stefan Eriksson are directors of both Northern Lights and Gizmondo Europe [my highlights] and each is the beneficial owner of 23.5% of the issued and outstanding share capital of Northern Lights.
In 2004 and the first quarter of 2005, Gizmondo Europe paid Anneli Freer, the spouse of Mr. Carl Freer, $116,000 and $57,831, respectively, for consultancy services provided to Gizmondo Europe. Mrs. Freer provided marketing and public relations services, an introduction to the performer Sting and time spent in
connection with the creation of the “Agaju” gaming concept currently in development.
In 2004, the Company paid $163,855 to Bankside Law for legal fees incurred on behalf of Mr. Freer, personally. The Company included this amount as additional compensation to Mr. Freer.
In the first quarter of 2005, Gizmondo Europe acquired a luxury automobile for Mr. Carroll. The automobile had a value of approximately $231,324 at the time of acquisition, which amount is included in his 2005 compensation.
In August 19, 2005, Ogilvy Group Sweden Limited (”Ogilvy”) commenced an action against Gizmondo Europe Limited in the Stockholm District Court to collect approximately $4.1 million plus interest allegedly owed to Ogilvy for marketing and advertising services provided to Gizmondo Europe during 2003 and 2004. Gizmondo Europe’s relationship with Ogilvy was terminated on June 30, 2005. The Company has issued 400,000 shares of its common stock to Ogilvy as collateral for Gizmondo Europe’s obligations to Ogilvy.
This is on top of the legal disputes highlighted in Part 1 of this post, plus there are others in Report.
I’m rather lost for words. Or am I missing something?
Excellent digging Russell - that was an excellent post.
These people are out of control.
It’s amazing these things are happening. It’s mind boggling that these people are basically bathing in money, tossing it around.
The well will run dry, the stuff will hit the fan - these people have no clue about running a modern media business.
I don’t recall who’s quote it was, or if I’ll get it exactly right, but here we go…
“The CEO and other executives should not make more than 3 times the sallary of the lowest paid person in the organization.”
A corporation that takes a position like this acknowledges the whole organization - it sends a message of importance - of equality.
Gizmondo are sending the message that the execs are fat kings, and that everyone else is a common peasant. Sorry, that doesn’t work like it used to.
So, now we get to watch their demise?
“Tune in next week for another episode of High Tech Drama! Same blog channel! Same blog time!
Keep up the great work Russell
Very cosy indeed. And almost unbelievable, except I know it’s true. Doesn’t bode well for the future. And it’s not a great product either. But if they’re operating like this, I wonder who else is?!
Related info at Gamasutra:
http://www.gamasutra.com/php-bin/news_index.php?story=6658
Also surprised that no-one has picked up on the fact that Stephan Ericsson entered a Gizmondo sponsored ferrari race-car in the Le Mans 24 Hour race- wonder if that showed up as an employee benefit?
In the early 90’s Bo Stefan “Fat”Eriksson (Director of Gizmondo Europe got a 10 year jail sentence in Sweden for fraud and served his time. He was involved in what the Swedish news media called the “Uppsala Mafia” He had two more companions from that Mafia era who, guess what are involved in the Gizmondo company group. Namely Head of Security in the group Johan Enander who served 6 years in jail for being the Uppsala Mafias torpedo and as late as 2003 he was senteced to 1 year in prison for beating up a women. The second old friend and companionwho is now a director of Gizmondo is Peter Ulf who got senteced to 8,5 years in prison for fraud connected to the Uppsala Mafias operations. The source for this information is the biggist newspaper in Stockholm, Sweden - Aftonbladet. Se link to the article. Unfortunately the article is in Swedish. http://www.aftonbladet.se/vss/nyheter/story/0,2789,718446,00.html
You also can find a rather extensive background history of these characters and the whole setup in this week’s issue of the business magazine Veckans Affarer.
How’s your swedish?
Pretty poor, tack Eklund
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