Monday, April 7, 2008

Changes in Island Pricing

For a long time now, i have often talked about potential policy changes at Linden Labs having an impact on the value of DDE's land holdings.

LL has just released this announcement on their Blog.

So, basically, in one fell swoop, the net asset value of DDE has dropped by about 40% - Islands that cost DDE $1675 USD each to buy, could now not even be sold for $1,000USD each. So, obviously, any future plans of DDE to liquidate assets in order to wind down the business are going to have to be rethought.

Yesterday, I would have valued the total estate holdings of DDE at about $42,000 USD. Today, they are worth about $25,000.

I just read the blog post moments ago - and frankly, on the heels of all the events over the last month or so with DDE, I am at a loss.

On the positive side, at this point the tier levels are remaining the same, so the ongoing operations - the revenue and expenses of renting the land - will remain unchanged and DDE will continue to make the same profits as before each month.

However, i will need to rethink the strategy I have in place for the future of DDE - it no longer makes any sense to rush into winding down the business - the logical next step MIGHT be to do some "dollar cost averaging" and in fact to start contemplating further expansion - to reduce the average cost of each sim in DDE, thereby improving the profitability and bringing the cost of overall assets lower per unit. At any rate, it is important that shareholders know what is going on.

To repeat - this does not affect the overall monthly revenue and profit projections for DDE - it just makes the company worth significantly less.

sigh

As always, thoughts and comments are appreciated.

dd

4 comments:

Gordon Wendt said...

I just read that blog post too, although for those of us who are considering buying the price drops are nice I sympathize as the comments on the post show LL just screwed a lot of people over with this change although in their defense I'm not sure how they could have done this better other than never changing the prices at all which is probably too much to ask of LL considering their track record on such things.

Tomac Sewell said...

I´ve been in sl for a little over a year, and to be honest this is the first time i can see the the logic in a policy change from LL.

They have a new ceo, and his job is raise the revenue/profit to keep the shareholders happy.
1000 more islands sold, raise the revenue with 3.5 mil.USD every year.
and the good part (again seen from a LL point off view) is that nobody get hurt, unless you want to sell your island here and now.

Bringing us to the real subject here, the winding down of DDE, well Del i have to agree it would be stupid to sell anything for a while, i´m sure in time prices will go back up, i know this will in no way effect my status as a shareholder, but i´m sorry to see that when you finally chose to get paid for your hard work, LL overnight make it almost impossible for you to wind down.

If you chose to do some "dollar cost averaging" and need some capital, well i´m still "your guy" and all you have to do is ask me.

Tom

Delicious Demar said...

You know - for the record - I just have to say that you are all amazing. I tend to wear my heart on my sleeve a bit, and i am not shy about blogging what is on my mind - and as we all know - the initial reaction to something is not always the ultimate reaction. I figure it is better to just get it out there and see what you all have to say than to keep it to myself and agonize - lol.

But I am constantly amazed at the support that you all continue to show - through all the twists and turns, one thing has always remained constant and that is the unwavering support of the people that have invested in DDE. It's hard to express how much that means to me - SL is not a place where trust comes easily - I know that as well as anyone. But every time I get a comment like the last one from Tomas, it tends to reaffirm my commitment to making it work, and to paraphrase an old school Canadian folk singer - makes me want to keep kicking at the darkness til it bleeds daylight.

Well - that was maybe a little overly dramatic - but wtf - it's 4am here... lol

dd

Anonymous said...

I'll second Tomac :-)

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