Far from the account. The title King of the British publisher Digital Entertainment, creator of the famous mobile game Candy Crush, plunged to a new all-time low on Wall Street, after the release of lower than expected quarterly results. The unexpected announcement of a special dividend appears to be an attempt to compensate for the losses of shareholders since the IPO of the company, but many investors interpret as indirect admission that the chances of rapid recovery of the course are rather weak.
In early Asian session, the share was 24% at $ 13.90.
In the second quarter 2014, gamblers spent through the App Apple Store, the Play Store Google or Facebook, $ 611 million in various games King, 30 million (-5%) lower than the first quarter. Spending on Candy Crush fell quickly, or -16% from one quarter to the next (361 million). Analysts expected the group reduces its dependence on the saga but the new titles Farm Heroes Saga and Bubble Witch Saga 2 are not growing as fast as expected.
In addition, management expects a further reduction in the amount of purchases in the third quarter, compared to the past. Digital King however hope a recovery in the last quarter, but ultimately expected for all of 2014 is now between 2.25 to 2,350,000,000 dollars, below expectations although this figure reflects an increase compared to 2013 ($ 1.98 billion).
Despite this disappointment on growth, the Group remains very profitable stage with a profit of $ 165.4 million, and a stream of net cash of 161.7 million in the quarter. Unexpectedly, King Digital Entertainment announced it would donate the bulk of harvested cash, so $ 150 million in the form of special dividend “to improve the performance of our shareholders.”
This gesture is interpreted as a rather clumsy attempt to reduce losses to shareholders who had subscribed at $ 22.50. The group did not mention this policy when it was introduced, and was rather seduce growth prospects for its performance.
Feeling experts Figaro Exchange : Digital King he has a future beyond Candy Crush Saga? This is the question that had already arisen at the time the company appeared at the gates of Wall Street. To date it has failed to prove that he would be able to repeat the same success with other titles. The downward revision of the 2014 targets is the straw that broke the camel’s back … It will be difficult to turn the corner as analysts deem the company still too dependent Candy Crush, more than two years after the release of title. Caution is called for.
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