Sweden’s Embracer is entering a new phase. The $3 billion video-game holding company announced on Tuesday that it would slash costs and investments to achieve a more “stable future”. For CEO Lars Wingefors’ investors, it’s a welcome acceptance of reality. The maker of hit games such as “Dead Island 2” saw its share price rocket by almost 1,000% between 2018 and May 2021 as it gobbled up gaming rivals. But the stock more than halved in May, due in part to the unexpected collapse of a mystery “transformative partnership”, and in part to profit warnings, not helped by a soft gaming market.
of a mystery “transformative partnership”, and in part to profit warnings, not helped by a soft gaming market.
The new strategy is to rely on its own free cash flow, rather than partnerships or capital hikes, to fund the business. Arguably that was inevitable all along. Wingefors wants to cut overhead costs by at least 10% compared to the last quarter’s annual run rate. He’ll also shelve projects with low forecast returns, and cut capital expenditures by at least 2.9 billion Swedish crowns by the 2024-25 financial year. It all points to a less sprawling, more straightforward company.
Investors still judge the group’s long-term prospects to be uninspiring – as testified by a lowly valuation multiple of just below 7 times last year’s diluted earnings per share, even after adjusting for a 3% share-price pop on Tuesday morning. That leaves Embracer vulnerable to a takeover at some point. At least Wingefors’ new standalone survival strategy gives him a stronger negotiating hand if a bid comes along.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
US inflation may have eased in May, but underlying price measures likely remained highConsumer price increases in the United States likely slowed sharply last month, extending a steady easing of inflation over the past year
Read more »
US inflation may have eased in May, but underlying price measures likely remained highConsumer price increases in the United States likely slowed sharply last month, extending a steady easing of inflation over the past year.
Read more »
Breakingviews - Shipping tax could yield $100 bln climate windfallThe shipping industry emits 2.9% of the world's greenhouse gases. It has also largely escaped taxation because what happens on the high seas is not in the jurisdiction of any single government.
Read more »
Breakingviews - China IPOs are uncoupling from Wall Street tooChina’s primary capital market has never been strongly connected to local economic performance thanks to Beijing’s micromanagement of initial public offerings. Increasingly it is detaching from Wall Street too. Despite a weak stock market and doubts about the vigour of China’s post-pandemic recovery, seeds-to-pesticides maker Syngenta is edging closer to a $9 billion debut, the mainland’s largest since Agricultural Bank of China’s in 2010. It’s a suboptimal time to list. Nonetheless, the Shanghai Stock Exchange will hold a hearing for the deal on Friday, per Refinitiv’s IFR. Syngenta is a pillar in Beijing’s strategy to shore up food security and will use the deal to pay down debt. It is also an example of how state-owned Chinese giants can acquire and successfully run overseas companies.
Read more »
Breakingviews - Berlusconi invented the entrepreneur as politicianFlamboyant tycoon-turned-Italian premier Silvio Berlusconi has bowed out, aged 86. The self-made billionaire pioneered the use of wealth and media to achieve political power. Though his Forza Italia party and business empire are already weakened and unlikely to regain much prominence after his death, his unorthodox political methods spawned imitators across the West.
Read more »
Breakingviews - Glencore’s Teck coal approach sends two signalsAt first sight, the latest Teck Resources chess move by Glencore is slightly confusing. Back in April the $22 billion Canadian miner rejected the $68 billion Swiss commodity giant’s merger offer, which planned to split the resulting entity into a separately listed coal company and a standalone metals company. While that approach still stands, Glencore on Monday said it has now also submitted a cash offer to buy only Teck’s coal unit.
Read more »