Behind the negative earnings crisis has now: cash cows can do how long?


xinlangkeji· 2016-11-08 08:57:31

to be a cash cow nothing bad, but the problem is the cash cow can do how long?

tour announced in 2016 Q3 earnings last week, at the end of the tour companies, but has not yet announced the results of grand game, the tour is only a revenue and net profit fell and game manufacturers, has continued to fall in 2016 the 3 quarter.

reported total revenues of third a quarter of $136 million, $189 million over the same period last year fell by 28%; net profit attributable to the tour was $39 million, compared with the same period last year fell 52% to $81 million. The online game revenue was $99 million, down 35%. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

this fall behind although there are reasons, but still is a phenomenon worthy of vigilance.

from the 2014 loss of $21 million 200 thousand to a profit of $228 million in 2015, a team put their life back from the brink. But the profitability, more by selling assets, contraction of business and mass layoffs, etc..

in the year before a large number of disposable income and cost substantially narrowed under special circumstances, in 2016 revenue and profit fell can be understood. But at the same time also can see the crisis did not really swim past, "tonic" can deal with the current, can not solve the future.

Denon eight in the end of the tour and Mobile Games have already entered a recession situation, swim so far and no strong new product launch. By the third quarter of 2016, the end of the tour revenues accounted for 50% of the game revenues, Mobile Games accounted for only 20%, even is lower than in 2015. In the layoffs at the same time, there has been a large number of core and key members of the brain drain, the problem of talent and incentive mechanism has not really improved.

plus conservative development strategy, the Sohu's "blood" recession, the demographic dividend, and the Tencent and the NetEase's market expansion and extrusion, a "sword of Damocles over" still hanging over his head. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

tour in the first three quarters, with a total profit of only $104 million in profit. If the next two months, and there is no strong product, according to the first three quarters of profits are calculated 3000-4000 million range, the annual profit is expected at around $140 million, and $228 million in 2015 compared to is the cliff downwards, the new crisis has been on the road.

  "negative" earnings  

2013 net profit for the 268 million 600 thousand tour. By 2014, they swim from profit into a loss, or even a net loss has reached $21 million 200 thousand. In this case, in 2014 November, the tour Huanshuai, Wang Tao changed from CEO Co CEO Yu Chuyuan and Chen Dewen. Style= text-align: "justify

Yu Chuyuan is the financial background, at that time in addition to the tour of the joint CEO, or the chief financial officer of the Sohu. And Chen Dewen is the background of the market operations, in the tour of the president and CO CEO, is a tour of the COO (chief operating officer). The first task of the new leadership team is to save the profits.

tour in 2015 net profit of $228 million, the three quarter of 2016 of $104 million, this measure, Changyou completed a questionnaire of it. But from other data point of view, this kind of profit is still a kind of "negative" gain through the contraction.

is the first revenue contraction, Wang Tao was in the period of CEO, the platform for many attempts to swim, to the Chen Dewen period, this attempt basically stopped. From the beginning of the first quarter of 2015, revenue began to swim in the tour continued to reduce. To the third quarter of 2016, quarter revenue of $216 million, compared to $fourth in the 136 million quarter of 2014, a decrease of 37%.

costs from the 15 years Q1 continued to decline year on year, in 2015 Q3, a decline in more than 30%, while in 2016 fell further, all above 40%. From the results point of view, the cost has been reduced from fourth in the 149 million quarter of 2014 to $third in the 65 million quarter of 2016.

"negative" earnings, because the tour earnings are more cost control, greatly reduce labor costs, promotion and other aspects of the game, and the main business income has not improved. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

tour of the game revenue, starting from the 15 year Q4, four consecutive quarters of the year down. From 2014 Q4 continued to decline, until 16 years Q3 reached the level of the basic level. 2014 swim average income per quarter revenue of up to $159 million in 2015 was $163 million, while the first three quarters of 2016 the average income dropped to $100 million. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

2016 in the fourth quarter of the year, I am afraid that there will be no change in the situation. According to the tour chief financial officer Zhou Jing revealed that the third quarter of 2016, the tour revenue and net profit are beyond the company's guidance. Expected four quarter total revenue and online game revenue will be slightly decreased". Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

from the beginning of 2013, the tour began the implementation of platform strategy actively, through the way of self-development and investment acquisitions, launched overseas third party application store, browser games, game show, broadcast live, RaidCall voice to web game platform platform and a series of products. Style= text-align: "justify white-space:; normal margin:; 20px 0.5em

"the game to make money to support the platform, the platform occupies the channel to push the game", is Wang Tao's strategy. But this kind of platform is not how successful, each platform does not form a synergistic effect, but also the lack of a leading role to play a Class A or S level platform products.

for the group's cash cow, Sohu also did not have much patience and time to swim, to explore the platform strategy.

in addition, due to the acquisition of RaidCall voice and Dolphin Browser, to bring a goodwill impairment losses and acquisition related intangible assets impairment losses. And Mobogenie and 17173 games network and a series of actions, so that the cost of a sharp rise in travel.

tour in 2011 cost only $137 million 200 thousand, in 2013 and 2014 costs soared to $350 million and $595 million.

also this time, tour also set up "operation excellence system" project, and audit the company responsible for the game project. This hope will be a change of business running water and modular, coupled with the expansion of the platform, so that the rapid expansion of the number of swim. Cumbersome audit process, but also makes a swim in the bloated, while the efficiency is even lower.

Huanshuai is carried out in this context. The tour of the current head of Chen Dewen, who had openly criticized the text of "excellent operation system". After the coaching change, Chen Dewen first make snap to cut about 1 thousand employees, and then continued to game business personnel have been cut.

a former employee told Sina Technology, when most of the tour staff, there are about more than 5 thousand people. Excellent operating system and platform products is the key area of layoffs. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

layoffs, tour also reduced the product before the development of various platforms in this area, greatly reduce the investment and expenditure, basically abandoned the platform strategy. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

in order to turn a profit, the tour also chose to sell the assets of the way. In August 2015, the Sohu announced that the game subsidiary swim at a price of $205 million to the third party transferred three wholly-owned subsidiaries, including seventh avenue. Style= text-align: "justify

2015 years also repeatedly heard 17173 to sell the news. Swimming for a long time the game has issued a notice, said the tour for a long time and the tour is a major trade negotiations, is widely believed to be 17173 of the sale of the transaction. But later released a tour on the sale of 17173 to clarify the notice. 17173 the fate is still uncertain.

; "turnaround pressure, and positioning for the tour Sohu cash cow, so after swim platform strategy failed to keep the road. Style= text-align: "justify white-space:; normal margin:; 20px 0.5em line-height:; 1.75em

from the capital, the tour is currently the only one still stay in the Nasdaq stock market, the game company.

one of the reasons is because the parent company Sohu also listed in the United States, and the difficulty of VIE is much higher than that of other units in the game company. On the other hand privatization requires a lot of money, for the current development in the low tide of the Sohu, to do a tour of the cost of privatization is too high.

and for the game business, before Zhang Zhaoyang and Shanda chairman Chen's attitude is quite similar, generally take it as a cash cow, and did not put it in a strategic position. Is not easy to profitability, travel to take up the task of the Sohu group blood transfusion, conservative capital is inevitable thing.

and swim belong to the end of the tour companies a few companies, in addition to fellow sufferers of Shanda games, the other end of the tour companies in recent years are a lot, actively seeking transformation. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

Tencent and NetEase to complete the transformation of the hand travel, and now are exploring the road of internationalization and the pan entertainment. Giant in the return of A shares, the first set up a dozen hand travel R & D project team, fully hand travel, while also developing mobile community tools, and layout of Internet banking and medical. Perfect world is the focus of the development of the pan entertainment, investment to buy cinema assets, holding Baidu literature etc..

in 2016 second quarter earnings conference call with analysts, swim CFO Zhou Jing has said, for the use of cash, tour would now consider merger and purchase for large IP. But so far this has not yet been seen.

it is October, the Sohu submitted a document to the U.S. Securities and Exchange Commission, Sohu said the new media will not swim regularly to the indirect wholly owned subsidiary of swim world loans, loan amount of not more than 1 billion yuan ($150 million) and the money will be used for company operation, but does not include tour and Sogou business. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

for the conservative strategy of the tour, the evaluation of the industry is not uniform. Insiders said on Sina, a good game is the foundation of the game company, pan entertainment and other places are more capital purposes, and there is no actual verification of the results and models. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

in the game, the tour also adopted a conservative strategy of the same. At the end of the tour, Chen Dewen said, no longer on the new end of the tour project. In hand travel, the number is taken to reduce the amount of capital and resources are more concentrated in the strategy of key products, especially the development of IP games. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

    loss of key personnel; "

layoffs and help solve the immediate contraction tour of the profit, but the loss of core personnel, but to swim brings risk in the future.

to have sold Seventh Avenue and Seventh Avenue as an example, the two Webpage Game product "bouncing church" and "the Divine Comedy" is the monthly flow of nearly billion top products, but after being a takeover, has occurred Yang Zhiyi Cao Kai, vice president of CEO and CTO and COO dragon Chunyan resigned, Meng Zhiyun, CPO (chief product officer) and the Divine Comedy studio head Hu Min's departure. Founding team all away, greatly reduced the Seventh Avenue R & D capabilities, combined with the background of the recession of the recession, so that no seventh avenue to launch a strong product.

2015" in May, before the tour game business group president Wang announced his resignation, announced the establishment of the new company Zilongjin mutual entertainment business. Before leaving the tour, Wang as a game business group president, the dominant end of the tour, travel business, especially the end of the tour and travel products, the introduction of IP agent.

2016 years in March, the former general manager of the tour north of research and development of the core producer and other more than and 30 people to leave the business. Children like to swim in the development of a comprehensive transformation of the tour tour, the company was appointed as the general manager of the mobile development, responsible for the tour of all mobile game development work. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

to June 2016, the tour Co CEO Yu Chuyuan also submitted his resignation application, in July 31st officially leave. Because Yu Chuyuan is the financial background, relatively speaking, the impact on the company's products less.

although the brain drain in the transformation of the end of the tour companies who are not uncommon, but so intensive home, and to ace product team, still a few conditions.

when the analysis of reason, tour of the former employees said, but the main thing is talent and incentive mode decision problems, conservative and leadership to understand the game more and less are affected. "Yin and Yang division" of the missing, is a microcosm.

2016 annual net profit and revenue fell, in fact of future performance began to highlight the risks of the. Core game product aging, revenue decline, lack of follow-up of new products, slow travel transition is the most urgent need to resolve the crisis.

CFO tour Jing Zhou once in the earnings conference call, said, in the first quarter of 2015, a Mobile Games revenue accounted for about 30% and. But by the third quarter of 2016, the proportion had dropped to 20%.

in 2016 third quarter earnings also mentioned that mobile games usually need to pay extra income, reduce the mobile gaming revenue, to swim the third quarter online game business gross profit rate to achieve growth.

Mobile Games tour business, in addition to launch by the end of 2014 Denon eight "3D" and other products Mobile Games performance in general. With the "day eight" 3D hand travel aging, the whole tour business have been reversed. End travel is a similar situation.

"Denon eight" game client attenuation, let swim third quarter average number of monthly active users fell 34%, a decline of 7%; active subscriber numbers fell by 23%. Style= text-align: "justify margin:; normal white-space:; 20px 0.5em line-height:; 1.75em

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Sina Technology (techsina)

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