Investors take flight after Angry Birds maker warns on
profit
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[February 22, 2018]
By Jussi Rosendahl and Tuomas Forsell
HELSINKI (Reuters) - Angry Birds game maker
Rovio Entertainment warned on profits on Thursday, wiping more than 40
percent off the Finnish company's shares and leaving investors nursing
big losses following a flotation last September.
Rovio blamed increased marketing costs and other investments for the
gloomier outlook. Its shares traded 45 percent lower at 5.5 euros by
1130 GMT, less than half the IPO price of 11.50 euros.
"That guidance is nowhere near the growth they previously talked about,"
said a fund manager with Rovio stock who declined to be named.
It was the latest setback for investors after the stock dropped by about
20 percent after Rovio's first interim report as a listed company in
November.
The company on Thursday forecast an operating margin at 9-11 percent in
2018 versus 10.6 percent in 2017 and said it expected sales of 260-300
million euros versus 297 million last year.
However, these figures were below analysts' forecasts of a margin of
14.5 percent and sales of 336 million euros, according to Thomson
Reuters data.
Following the IPO in September, Rovio CEO Kati Levoranta said "the
mobile gaming market is expected to grow fast and we are well positioned
to take an advantage of this growth."
Rovio's largest investor with 40.8 percent of the shares is Trema
International, a company owned by Kaj Hed, the uncle of Rovio's
co-founder Niklas Hed.
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The Angry Birds Red balloon is held during the 91st Macy's
Thanksgiving Day Parade in New York, New York, U.S., November 23,
2017. REUTERS/Carlo Allegri /File Photo
Rovio saw rapid growth after the 2009 launch of the original "Angry Birds" game,
in which players used slingshots to attack pigs who stole birds' eggs. But the
company plunged to an operating loss and cut a third of its staff in 2015 due to
tough competition.
Rovio had bounced back in 2016 with a help of its 3D Angry Birds movie, and
followed up with the oversubscribed IPO that valued it at $1 billion.
Rovio said in Thursday's statement it expects to use around 30 percent of its
games revenue to add new users in 2018, adding that the cost per user had risen
significantly in the market.
"The costs for new users are at a threshold, that's too high for second-tier
games... What Rovio is trying, increasing sales by spending on marketing, the
equation just doesn't work", said Aaron Kaartinen, analyst at Finnish asset
manager FIM.
"Their games don't have enough natural traction among players."
Rovio's game titles include "Angry Birds 2," "Angry Birds Blast", "Angry Birds
Friends" and "Battle Bay."
(Reporting by Jussi Rosendahl and Tuomas Forsell; editing by Alexander Smith and
Keith Weir)
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