(Reuters) - Google Inc revised up the bill for job cuts at its money-losing Motorola Mobility mobile phone unit in the third quarter and warned of further restructuring that may result in 'significant' additional charges.
Google raised its estimates for severance-related charges 9 percent to $300 million from $275 million and warned it faced another $40 million in other costs in the quarter to quit facilities and markets.
'Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,' the company said in a statement.
Google bought Motorola last year for $12.5 billion, with the aim of bolstering its patent portfolio in the intellectual property fight its Android mobile system faces with rivals Apple Inc and Samsung Electronics Co Ltd.
But the Internet search giant has found itself lumbered with a restructuring headache, saying in August it would cut 20 percent of the Motorola Mobility workforce as it moves to make more smartphones and fewer simple mobiles.
'Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant,' Google said.
The New York Times has previously reported that Google planned to shrink Motorola's operations in Asia by exiting unprofitable markets and abandon low-end devices to focus on a few models.
Last year's purchase of Motorola raised investor concerns at the time that the software firm was buying into a hardware business with much lower profit margins and in which it had little experience.
Analysts were expecting Google to wind down many of Motorola's legacy businesses to fit its strategy.
Google shares were marked up 0.3 percent at $764.85 in light trading before the bell on the Nasdaq on Thursday.
(Reporting by Neha Alawadhi in Bangalore; Editing by Rodney Joyce)
This news article is brought to you by SAVING MONEY BLOG - where latest news are our top priority.
Thursday, October 4, 2012
Google warns of more cuts at Motorola, third-quarter cuts to cost $340 million
(Reuters) - Google Inc said planned job cuts at its Motorola Mobility mobile phone unit will cost about $340 million in severance and other costs in the third quarter and it warned of further restructuring that may result in 'significant' charges.
'Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,' the company said in a statement.
Google plans to shrink Motorola's operations in Asia by exiting unprofitable markets, abandoning low-end devices and focusing on a few models instead of dozens, the New York Times had reported earlier.
'Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant,' the company said.
The Internet search giant said in August that it would cut 20 percent of the workforce at Motorola Mobility, which it bought for $12.5 billion last year, as it moves to make more smartphones and fewer simple mobiles.
By pairing Motorola's smartphone business with its Android software, Google may have a better chance of mounting a direct challenge to Apple Inc's popular iPhone.
The acquisition raised concerns on Wall Street as investors fretted that Google was entering a business with much lower profit margins and in which it had little experience.
Analysts were expecting Google to wind down many of Motorola's legacy businesses to fit its strategy.
Google shares were up $1.60 at $764.10 in trading before the bell on the Nasdaq on Thursday.
(Reporting by Neha Alawadhi in Bangalore; Editing by Rodney Joyce and Sreejiraj Eluvangal)
This article is brought to you by AFFORDABLE COMPUTERS.
'Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,' the company said in a statement.
Google plans to shrink Motorola's operations in Asia by exiting unprofitable markets, abandoning low-end devices and focusing on a few models instead of dozens, the New York Times had reported earlier.
'Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant,' the company said.
The Internet search giant said in August that it would cut 20 percent of the workforce at Motorola Mobility, which it bought for $12.5 billion last year, as it moves to make more smartphones and fewer simple mobiles.
By pairing Motorola's smartphone business with its Android software, Google may have a better chance of mounting a direct challenge to Apple Inc's popular iPhone.
The acquisition raised concerns on Wall Street as investors fretted that Google was entering a business with much lower profit margins and in which it had little experience.
Analysts were expecting Google to wind down many of Motorola's legacy businesses to fit its strategy.
Google shares were up $1.60 at $764.10 in trading before the bell on the Nasdaq on Thursday.
(Reporting by Neha Alawadhi in Bangalore; Editing by Rodney Joyce and Sreejiraj Eluvangal)
This article is brought to you by AFFORDABLE COMPUTERS.
HP's outlook disappoints, shares hit nine-year low
SAN FRANCISCO (Reuters) - Hewlett-Packard Co's shares plunged to a nine-year low on Wednesday after Chief Executive Meg Whitman warned of an unexpectedly steep earnings slide in 2013, with revenue set to fall in every business division except software.
Wall Street had hoped for quicker signs of progress on Whitman's turnaround plan, which centers on transforming the former industry powerhouse into an enterprise computing corporation that can take on IBM and Dell Inc.
Whitman, who took the helm of HP just over a year ago after a failed bid to become governor of California, told investors that the company's recovery would start to become visible only in fiscal 2014, when investments begin to pay off.
She blamed unprecedented executive turnover in past years for dragging out the Silicon Valley company's turnaround.
Analysts say HP is struggling to shore up its credibility on Wall Street while battling crumbling margins in an increasingly cut-throat PC arena, tapering-off of IT spending, and an internal organizational overhaul that involves thousands of layoffs.
'I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy,' said Shaw Wu, an analyst with Sterne Agee.
Shares of HP, the largest U.S. technology company by sales, tumbled 13 percent on Wednesday in the biggest single-day decline since August 2011.
Shares of some of HP's contract makers in Asia also fell when trading opened there on Thursday.
HP gave a particularly gloomy outlook for enterprise services, its business providing services to corporations and a key component of Whitman's rescue plan.
Revenue from that division will dive 11 to 13 percent in fiscal 2013 and be barely profitable, with operating margins of zero to 3 percent. That stands in stark contrast to IBM, which raised its full-year earnings outlook, reflecting its ability to manage costs, despite flat software revenue in the second quarter and a 2 percent decline in services.
Whitman became HP's third CEO in as many years after taking over following Leo Apotheker's abrupt dismissal just over one year ago. She is trying to revitalize the former industry icon via layoffs, cost cutting, and expansion into areas with longer-term potential such as enterprise computing services.
'The single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues,' Whitman told the investor conference in San Francisco.
'This is important because as a result it is going to take longer to right this ship than any of us would like,' she added.
HP has lost more than two-thirds of its value since 2010, when its capitalization topped out at about $104.5 billion. Squeezed by crumbling demand for personal computers in a mobile era, significant leadership turbulence, and the advent of Apple Inc's iPad that year, HP's stock embarked on a steady decline. The company now has a market value around $30 billion.
Since Whitman took the helm in September 2011, the stock has fallen about 35 percent.
MUSICAL CHAIRS
HP has suffered through years of turbulence. Apotheker's 11-month tenure was marked by an acceleration of departures from various divisions, such as networking chief Marius Haas, as he brought in former coworkers from SAP AG.
Apotheker's predecessor, Mark Hurd, who is now president of Oracle Corp, also departed abruptly, after a sexual harassment scandal.
HP, like rival Dell, is trying to transform itself into a major enterprise computing provider in the mold of IBM, while slashing expenses to boost the bottom line. Shares of Dell, the No. 2 U.S. PC maker after HP, fell 4.7 percent on Wednesday, mired near nine-year lows.
HP is laying off 29,000 employees over the next two years and has written off $10.8 billion mostly related to the writedown of its EDS services business. Meantime, its business continues to be hit by a slowing in corporate spending and personal computer demand worldwide.
For 2013, the company forecast overall earnings, excluding restructuring charges and other items, at between $3.40 to $3.60 a share in fiscal 2013. That's well below the average forecast by Wall Street analyst of $4.18, according to Thomson Reuters I/B/E/S.
A large part of the shortfall rests on the projected plunge in enterprise revenue, a division that sells myriad services to businesses and has seen an erosion in profitability.
Operating profit fell 22 percent in the July quarter, surpassed only by a 28 percent slump in personal computers.
Mike Nefkens, HP's acting global enterprise leader ,said fiscal 2013 'will be a fix and build year.'
'We expect long-term growth to be back in the 3-5 percent range and long-term profit to be in the 7-9 percent range,' he said.
The heads of other business units also addressed Wednesday's conference, touting both new products and challenges facing the groups.
HP is battling formidable rivals on several fronts, particularly in cloud, or remote computing, products and services, with Oracle and IBM aggressively courting corporate customers.
China's Lenovo Group Ltd may overtake HP as the world's biggest PC seller this year.
'Asian brands will continue to outperform western brands,' said Angela Hsiang, a Taiwan-based analyst at KGI Securities. 'Western brands in general are lagging their Asian peers in terms of grabbing market share in fast-growing emerging markets.'
Reflecting that brighter outlook, Lenovo shares were not badly hit by HP's profit warning, falling less than 1 percent. But Taiwan's Quanta Computer Inc and Compal Electronics Inc, both contract makers for HP, suffered more, with their shares dropping around 4 percent in Taipei.
Whitman vowed to reduce the number of product offerings and to cut costs as HP tries to recover in a worsening macro-economic environment. She has said it will take five years for the turnaround to be effective.
'All of this is fixable but it is going to take some time,' she said.
She said HP eventually will have to compete in the smartphone market, but stopped short of laying out a plan and said there were no plans to introduce a smartphone in 2013.
Longer term, HP expects 'to be a GDP-like growth company with key pockets of higher growth,' said Cathie Lesjak, HP's chief financial officer.
Its stock closed down 13 percent at $14.91 on the New York Stock Exchange.
(Additional reporting by Edwin Chan in San Francisco, Lee Chyen Yee in Hong Kong and Jonathan Standing in Taipei; Editing by Leslie Adler and Alex Richardson)
This news article is brought to you by SAVING MONEY BLOG - where latest news are our top priority.
Wall Street had hoped for quicker signs of progress on Whitman's turnaround plan, which centers on transforming the former industry powerhouse into an enterprise computing corporation that can take on IBM and Dell Inc.
Whitman, who took the helm of HP just over a year ago after a failed bid to become governor of California, told investors that the company's recovery would start to become visible only in fiscal 2014, when investments begin to pay off.
She blamed unprecedented executive turnover in past years for dragging out the Silicon Valley company's turnaround.
Analysts say HP is struggling to shore up its credibility on Wall Street while battling crumbling margins in an increasingly cut-throat PC arena, tapering-off of IT spending, and an internal organizational overhaul that involves thousands of layoffs.
'I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy,' said Shaw Wu, an analyst with Sterne Agee.
Shares of HP, the largest U.S. technology company by sales, tumbled 13 percent on Wednesday in the biggest single-day decline since August 2011.
Shares of some of HP's contract makers in Asia also fell when trading opened there on Thursday.
HP gave a particularly gloomy outlook for enterprise services, its business providing services to corporations and a key component of Whitman's rescue plan.
Revenue from that division will dive 11 to 13 percent in fiscal 2013 and be barely profitable, with operating margins of zero to 3 percent. That stands in stark contrast to IBM, which raised its full-year earnings outlook, reflecting its ability to manage costs, despite flat software revenue in the second quarter and a 2 percent decline in services.
Whitman became HP's third CEO in as many years after taking over following Leo Apotheker's abrupt dismissal just over one year ago. She is trying to revitalize the former industry icon via layoffs, cost cutting, and expansion into areas with longer-term potential such as enterprise computing services.
'The single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues,' Whitman told the investor conference in San Francisco.
'This is important because as a result it is going to take longer to right this ship than any of us would like,' she added.
HP has lost more than two-thirds of its value since 2010, when its capitalization topped out at about $104.5 billion. Squeezed by crumbling demand for personal computers in a mobile era, significant leadership turbulence, and the advent of Apple Inc's iPad that year, HP's stock embarked on a steady decline. The company now has a market value around $30 billion.
Since Whitman took the helm in September 2011, the stock has fallen about 35 percent.
MUSICAL CHAIRS
HP has suffered through years of turbulence. Apotheker's 11-month tenure was marked by an acceleration of departures from various divisions, such as networking chief Marius Haas, as he brought in former coworkers from SAP AG.
Apotheker's predecessor, Mark Hurd, who is now president of Oracle Corp, also departed abruptly, after a sexual harassment scandal.
HP, like rival Dell, is trying to transform itself into a major enterprise computing provider in the mold of IBM, while slashing expenses to boost the bottom line. Shares of Dell, the No. 2 U.S. PC maker after HP, fell 4.7 percent on Wednesday, mired near nine-year lows.
HP is laying off 29,000 employees over the next two years and has written off $10.8 billion mostly related to the writedown of its EDS services business. Meantime, its business continues to be hit by a slowing in corporate spending and personal computer demand worldwide.
For 2013, the company forecast overall earnings, excluding restructuring charges and other items, at between $3.40 to $3.60 a share in fiscal 2013. That's well below the average forecast by Wall Street analyst of $4.18, according to Thomson Reuters I/B/E/S.
A large part of the shortfall rests on the projected plunge in enterprise revenue, a division that sells myriad services to businesses and has seen an erosion in profitability.
Operating profit fell 22 percent in the July quarter, surpassed only by a 28 percent slump in personal computers.
Mike Nefkens, HP's acting global enterprise leader ,said fiscal 2013 'will be a fix and build year.'
'We expect long-term growth to be back in the 3-5 percent range and long-term profit to be in the 7-9 percent range,' he said.
The heads of other business units also addressed Wednesday's conference, touting both new products and challenges facing the groups.
HP is battling formidable rivals on several fronts, particularly in cloud, or remote computing, products and services, with Oracle and IBM aggressively courting corporate customers.
China's Lenovo Group Ltd may overtake HP as the world's biggest PC seller this year.
'Asian brands will continue to outperform western brands,' said Angela Hsiang, a Taiwan-based analyst at KGI Securities. 'Western brands in general are lagging their Asian peers in terms of grabbing market share in fast-growing emerging markets.'
Reflecting that brighter outlook, Lenovo shares were not badly hit by HP's profit warning, falling less than 1 percent. But Taiwan's Quanta Computer Inc and Compal Electronics Inc, both contract makers for HP, suffered more, with their shares dropping around 4 percent in Taipei.
Whitman vowed to reduce the number of product offerings and to cut costs as HP tries to recover in a worsening macro-economic environment. She has said it will take five years for the turnaround to be effective.
'All of this is fixable but it is going to take some time,' she said.
She said HP eventually will have to compete in the smartphone market, but stopped short of laying out a plan and said there were no plans to introduce a smartphone in 2013.
Longer term, HP expects 'to be a GDP-like growth company with key pockets of higher growth,' said Cathie Lesjak, HP's chief financial officer.
Its stock closed down 13 percent at $14.91 on the New York Stock Exchange.
(Additional reporting by Edwin Chan in San Francisco, Lee Chyen Yee in Hong Kong and Jonathan Standing in Taipei; Editing by Leslie Adler and Alex Richardson)
This news article is brought to you by SAVING MONEY BLOG - where latest news are our top priority.
Wednesday, October 3, 2012
Asia's virtual masters eye Zynga's real lunch
SAN FRANCISCO (Reuters) - A decade ago, a developer from Korean gamemaker Nexon threw a few lines of code together to create an image of a flower to present to his girlfriend, buying himself more videogame time as she sat impatiently by his side at an Internet cafe.
And, so the industry legend goes, the 'virtual good' was born. In the years since, digitally created items for games and social media - from beers on Facebook to weapons in role-playing worlds - have grown into a $15 billion globe-spanning business. They helped generate the likes of Zynga Inc and underpin a fast-expanding online-gaming industry.
Now, companies such as Nexon that pioneered the model across Asia are muscling onto Zynga's turf, hoping to cash in on fast-growing U.S. spending by bringing their distinct Asian brand of fast-paced 'freemium' games - free with optional in-game purchases.
With PC sales stagnating even in China, the industry's heavyweights are increasingly doubling down on the mobile space and targeting the Western market as more smartphones and tablets land in users' hands. Encouraged also by slowing growth in casual games on Facebook - basic time-killers where game play can be measured in minutes rather than hours - they have stepped up their investments this year.
'The emphasis of the Asian publishers is to successfully set foot in Western markets, and that gives you a blueprint of what's to come,' said Joost van Dreunen, managing director of digital goods intelligence firm SuperData Research. 'The free-to-play games for mobile are where we identify huge growth.'
Asian gaming bigwigs began exploring the Western market a few years ago with high-engagement, addictive and often hard-core Web-browser titles. But this year has brought a spike in activity that threatens to undermine Zynga's own efforts to diversify into mobile gaming and wean itself off Facebook Inc.
Japanese social gaming powerhouse DeNA Co aims to enlarge its social and mobile gaming network Mobage in America. It is releasing games based on the Marvel superhero and Transformers franchises. GREE Inc has bought two San Francisco-based mobile game developers since May and is spending heavily to acquire American users.
Nexon, which went public in December, also wants to be a prominent American player and is gearing up for a massive launch of 'Epic of the Three Kingdoms' in 3D for PC and mobile devices.
The new competition comes at a bad time for Zynga, the $2 billion company behind 'FarmVille' that gets over nine-tenths of its revenue selling virtual goods: maps, weapons and other items that give players an edge that are offered for small amounts, often under $1, as enhancements in games that are free to download and play.
The company helped convert large numbers of nongamers into players through colorful, less time-consuming casual games like 'CityVille,' but is now struggling to monetize mobile games, stanch executive losses, and resuscitate a floundering stock that has dropped 70 percent since the beginning of this year.
'Zynga and other American game companies are already feeling some pain from the marketing and advertising side from GREE in particular, but also DeNA, in terms of the significant amount that they are spending on acquiring users in the U.S.,' said Colin Sebastian, an analyst at Robert W. Baird.
NOT A FAD
Asia's gaming titans hope the United States will be the source of the industry's next phase of expansion, perhaps at Zynga's expense, in a reversal of how Western companies typically rely on emerging markets to bolster growth.
With the proliferation of mobile devices the worldwide market for virtual goods will surpass $20 billion by 2015, according to SuperData Research. U.S. gamers spend much less than Asians, but their expenditure is growing faster.
Revenue from U.S. virtual goods is expected to grow 36 percent to $3 billion this year and double to about $6 billion in two years, versus shrinking sales of traditional video game products, according to Bonnie Ho, lead research analyst at Inside Network.
The Asian market is upwards of $10 billion.
Slower Internet speeds in America, pose a challenge for free games that stream on browsers or on mobile. For instance, the 16 megabyte per second average Internet speed in South Korea is more conducive to the online gaming business than the U.S. average rate of about 7 megabytes per second.
But with expanding infrastructure - Google introduced a 1 gigabyte per second service in Kansas City, Missouri, in July - that barrier is gradually dissipating.
The trick is to give U.S. gamers reason to spend via more immersive, or high-engagement, games. Analysts say the casual crowd is less likely to spend for that extra edge and stay absorbed than the intensely competitive action-gamers that Nexon and others draw.
In the U.S., conversion rates for transforming a casual player into one who will splurge on virtual goods have doubled to around 3.1 percent since last year, according to van Dreunen.
To keep up sales of virtual items, Zynga may need to launch more immersive titles - strategy games, even action-shooters - and capture robust growth in the mobile space.
'When you deal with a non-core, non-dedicated, non-loyal segment, it's almost like you have to treat them like they are ten-year-olds with attention deficit disorder,' Jesse Divnich, an analyst at video game research firm EEDAR said.
That means constantly designing new games, introducing fresh elements into existing ones, and otherwise giving players a reason to keep coming back and hopefully spring for items.
Zynga said last month it will buy digital games studio A Bit Lucky to offer 'mid-core' games - titles that sit between slickly produced, addictive videogames and basic casual games such as its popular Words with Friends.
'In Asia and beyond, this (free-to-play) model is here to stay, and it's definitely not a fad,' said Allison Luong of Pearl Research.
ASIAN DOMINATION
Over a decade ago, piracy in Asia killed its traditional business of selling games in boxes that are then installed on computers. Bootleg games became widely available for a fraction of the cost, spurring legitimate publishers toward experimenting with the then-novel idea of online free-to-play games. High-speed Internet services brought in a steady stream of players.
All that fed the growth of the regional virtual goods industry. China is the world's largest Internet market. Around 60 percent of its 540 million users play online games, making them highly lucrative.
'In China our business grew 50 percent year over year. That's just a really good indication of what the opportunity is,' said Nexon Chief Financial Officer Owen Mahoney.
Zynga now acknowledges the importance of gaining a foothold in Asia's gaming scene, even as Asian players make their way into the U.S. market. In 2010 it bought Tokyo-based social games maker Unoh to lead its Japanese operation. Earlier this year, it launched Pokemon-like role-playing game 'Montopia' and social game 'Ayakashi' in Japan.
This summer it took 'Draw Something' to Chinese audiences, partnering with social network Sina Weibo.
For now, over half of $75 billion in U.S. videogames revenue comes from traditional packaged games. The mobile device explosion will change that proportion in coming years.
'The install base is growing as more tablets, phones hit the market everyday. But there are still some roadblocks on how do we really maximize the growth opportunity here,' said Divnich.
(Editing by Prudence Crowther)
This news article is brought to you by MUSIC UNITED 1 - where latest news are our top priority.
And, so the industry legend goes, the 'virtual good' was born. In the years since, digitally created items for games and social media - from beers on Facebook to weapons in role-playing worlds - have grown into a $15 billion globe-spanning business. They helped generate the likes of Zynga Inc and underpin a fast-expanding online-gaming industry.
Now, companies such as Nexon that pioneered the model across Asia are muscling onto Zynga's turf, hoping to cash in on fast-growing U.S. spending by bringing their distinct Asian brand of fast-paced 'freemium' games - free with optional in-game purchases.
With PC sales stagnating even in China, the industry's heavyweights are increasingly doubling down on the mobile space and targeting the Western market as more smartphones and tablets land in users' hands. Encouraged also by slowing growth in casual games on Facebook - basic time-killers where game play can be measured in minutes rather than hours - they have stepped up their investments this year.
'The emphasis of the Asian publishers is to successfully set foot in Western markets, and that gives you a blueprint of what's to come,' said Joost van Dreunen, managing director of digital goods intelligence firm SuperData Research. 'The free-to-play games for mobile are where we identify huge growth.'
Asian gaming bigwigs began exploring the Western market a few years ago with high-engagement, addictive and often hard-core Web-browser titles. But this year has brought a spike in activity that threatens to undermine Zynga's own efforts to diversify into mobile gaming and wean itself off Facebook Inc.
Japanese social gaming powerhouse DeNA Co aims to enlarge its social and mobile gaming network Mobage in America. It is releasing games based on the Marvel superhero and Transformers franchises. GREE Inc has bought two San Francisco-based mobile game developers since May and is spending heavily to acquire American users.
Nexon, which went public in December, also wants to be a prominent American player and is gearing up for a massive launch of 'Epic of the Three Kingdoms' in 3D for PC and mobile devices.
The new competition comes at a bad time for Zynga, the $2 billion company behind 'FarmVille' that gets over nine-tenths of its revenue selling virtual goods: maps, weapons and other items that give players an edge that are offered for small amounts, often under $1, as enhancements in games that are free to download and play.
The company helped convert large numbers of nongamers into players through colorful, less time-consuming casual games like 'CityVille,' but is now struggling to monetize mobile games, stanch executive losses, and resuscitate a floundering stock that has dropped 70 percent since the beginning of this year.
'Zynga and other American game companies are already feeling some pain from the marketing and advertising side from GREE in particular, but also DeNA, in terms of the significant amount that they are spending on acquiring users in the U.S.,' said Colin Sebastian, an analyst at Robert W. Baird.
NOT A FAD
Asia's gaming titans hope the United States will be the source of the industry's next phase of expansion, perhaps at Zynga's expense, in a reversal of how Western companies typically rely on emerging markets to bolster growth.
With the proliferation of mobile devices the worldwide market for virtual goods will surpass $20 billion by 2015, according to SuperData Research. U.S. gamers spend much less than Asians, but their expenditure is growing faster.
Revenue from U.S. virtual goods is expected to grow 36 percent to $3 billion this year and double to about $6 billion in two years, versus shrinking sales of traditional video game products, according to Bonnie Ho, lead research analyst at Inside Network.
The Asian market is upwards of $10 billion.
Slower Internet speeds in America, pose a challenge for free games that stream on browsers or on mobile. For instance, the 16 megabyte per second average Internet speed in South Korea is more conducive to the online gaming business than the U.S. average rate of about 7 megabytes per second.
But with expanding infrastructure - Google introduced a 1 gigabyte per second service in Kansas City, Missouri, in July - that barrier is gradually dissipating.
The trick is to give U.S. gamers reason to spend via more immersive, or high-engagement, games. Analysts say the casual crowd is less likely to spend for that extra edge and stay absorbed than the intensely competitive action-gamers that Nexon and others draw.
In the U.S., conversion rates for transforming a casual player into one who will splurge on virtual goods have doubled to around 3.1 percent since last year, according to van Dreunen.
To keep up sales of virtual items, Zynga may need to launch more immersive titles - strategy games, even action-shooters - and capture robust growth in the mobile space.
'When you deal with a non-core, non-dedicated, non-loyal segment, it's almost like you have to treat them like they are ten-year-olds with attention deficit disorder,' Jesse Divnich, an analyst at video game research firm EEDAR said.
That means constantly designing new games, introducing fresh elements into existing ones, and otherwise giving players a reason to keep coming back and hopefully spring for items.
Zynga said last month it will buy digital games studio A Bit Lucky to offer 'mid-core' games - titles that sit between slickly produced, addictive videogames and basic casual games such as its popular Words with Friends.
'In Asia and beyond, this (free-to-play) model is here to stay, and it's definitely not a fad,' said Allison Luong of Pearl Research.
ASIAN DOMINATION
Over a decade ago, piracy in Asia killed its traditional business of selling games in boxes that are then installed on computers. Bootleg games became widely available for a fraction of the cost, spurring legitimate publishers toward experimenting with the then-novel idea of online free-to-play games. High-speed Internet services brought in a steady stream of players.
All that fed the growth of the regional virtual goods industry. China is the world's largest Internet market. Around 60 percent of its 540 million users play online games, making them highly lucrative.
'In China our business grew 50 percent year over year. That's just a really good indication of what the opportunity is,' said Nexon Chief Financial Officer Owen Mahoney.
Zynga now acknowledges the importance of gaining a foothold in Asia's gaming scene, even as Asian players make their way into the U.S. market. In 2010 it bought Tokyo-based social games maker Unoh to lead its Japanese operation. Earlier this year, it launched Pokemon-like role-playing game 'Montopia' and social game 'Ayakashi' in Japan.
This summer it took 'Draw Something' to Chinese audiences, partnering with social network Sina Weibo.
For now, over half of $75 billion in U.S. videogames revenue comes from traditional packaged games. The mobile device explosion will change that proportion in coming years.
'The install base is growing as more tablets, phones hit the market everyday. But there are still some roadblocks on how do we really maximize the growth opportunity here,' said Divnich.
(Editing by Prudence Crowther)
This news article is brought to you by MUSIC UNITED 1 - where latest news are our top priority.
Andreessen Horowitz invests $15 million in website Rap Genius
SAN FRANCISCO (Reuters) - Venture capitalist Ben Horowitz is famous for starting his blog posts with rap lyrics. Now, he will be putting his money into the mix.
His firm, Andreessen Horowitz, announced Wednesday a $15 million investment in Rap Genius, a website using crowdsourcing to dig into and explain arcane details of rap lyrics.
Think of Rap Genius as the Talmud, Horowitz said in a phone interview on Wednesday, referring to the Jewish text that interprets the Old Testament.
As an example, Horowitz cited a Lil Wayne lyric, 'real G's move in silence like lasagna.' Click on it, and Rap Genius explains the singer is referring to gangsters and the silent g in lasagna.
'If you don't get it, don't be ashamed,' reads the Rap Genius note accompanying the line. '?uestlove from The Roots didn't either.' Embedded in the note is a Tweet from the musician known as Questlove citing the lyric with the question #AmIGettinold?
The company is slowly spreading to other categories such as literature, political speeches, and science papers.
'We think the community will continue to expand beyond rap into all culture,' wrote Horowitz's colleague, Marc Andreessen, in a blog post announcing the investment.
Horowitz first met Rap Genius's co-founders Mahbod Moghadam, Ilan Zechory, and Tom Lehman last year when he visited business mentoring program Y Combinator, which they were attending. The three met as undergraduates at Yale University.
It is not immediately clear how Rap Genius will make money; Horowitz called the company's business model 'TBD' (or To Be Determined).
'If they succeed in the mission, and they end up annotating the Internet, there's a huge audience for that,' Horowitz said. At that point, a path to revenue would emerge, he added.
Andreessen Horowitz, founded three years ago, announced in January it had raised a $1.5 billion fund, its third. It has invested in some of the country's hottest start-ups, including online bulletin board Pinterest and social-networking site Facebook.
(Reporting By Sarah McBride; Editing by Bernard Orr)
This news article is brought to you by SEXUAL HEALTH NEWS - where latest news are our top priority.
His firm, Andreessen Horowitz, announced Wednesday a $15 million investment in Rap Genius, a website using crowdsourcing to dig into and explain arcane details of rap lyrics.
Think of Rap Genius as the Talmud, Horowitz said in a phone interview on Wednesday, referring to the Jewish text that interprets the Old Testament.
As an example, Horowitz cited a Lil Wayne lyric, 'real G's move in silence like lasagna.' Click on it, and Rap Genius explains the singer is referring to gangsters and the silent g in lasagna.
'If you don't get it, don't be ashamed,' reads the Rap Genius note accompanying the line. '?uestlove from The Roots didn't either.' Embedded in the note is a Tweet from the musician known as Questlove citing the lyric with the question #AmIGettinold?
The company is slowly spreading to other categories such as literature, political speeches, and science papers.
'We think the community will continue to expand beyond rap into all culture,' wrote Horowitz's colleague, Marc Andreessen, in a blog post announcing the investment.
Horowitz first met Rap Genius's co-founders Mahbod Moghadam, Ilan Zechory, and Tom Lehman last year when he visited business mentoring program Y Combinator, which they were attending. The three met as undergraduates at Yale University.
It is not immediately clear how Rap Genius will make money; Horowitz called the company's business model 'TBD' (or To Be Determined).
'If they succeed in the mission, and they end up annotating the Internet, there's a huge audience for that,' Horowitz said. At that point, a path to revenue would emerge, he added.
Andreessen Horowitz, founded three years ago, announced in January it had raised a $1.5 billion fund, its third. It has invested in some of the country's hottest start-ups, including online bulletin board Pinterest and social-networking site Facebook.
(Reporting By Sarah McBride; Editing by Bernard Orr)
This news article is brought to you by SEXUAL HEALTH NEWS - where latest news are our top priority.
Google denied summary judgment in patent dispute with Vringo
(Reuters) - Mobile phone software maker Vringo Inc's shares jumped 39 percent on Wednesday after a judge denied Google Inc a motion for summary judgment in a patent dispute.
Google was sued by Innovate/Protect Inc, which was acquired by Vringo. Vringo is seeking an award of at least $696 million from Google, financial website iStockAnalyst reported.
'Having carefully reviewed the parties' pleadings, the court finds that summary judgment is inappropriate at this time as there are genuine issues of material fact in dispute,' U.S. District Judge Raymond Jackson said in his order.
Google could not be immediately reached for comment.
In July, Vringo completed its merger with Innovate/Protect Inc - who had sued Google and AOL Inc, among others, for patent infringement.
AOL settled a part of the dispute in August, according to media reports.
Shares of the company, which has a market value of about $180 million, were up 35 percent at $4.19 on Wednesday afternoon on the American Stock Exchange. The stock has more than doubled in the last year.
(Reporting by Supantha Mukherjee and Chandni Doulatramani in Bangalore; Editing by Supriya Kurane)
This news article is brought to you by CELEBRITY GOSSIP NEWS - where latest news are our top priority.
Google was sued by Innovate/Protect Inc, which was acquired by Vringo. Vringo is seeking an award of at least $696 million from Google, financial website iStockAnalyst reported.
'Having carefully reviewed the parties' pleadings, the court finds that summary judgment is inappropriate at this time as there are genuine issues of material fact in dispute,' U.S. District Judge Raymond Jackson said in his order.
Google could not be immediately reached for comment.
In July, Vringo completed its merger with Innovate/Protect Inc - who had sued Google and AOL Inc, among others, for patent infringement.
AOL settled a part of the dispute in August, according to media reports.
Shares of the company, which has a market value of about $180 million, were up 35 percent at $4.19 on Wednesday afternoon on the American Stock Exchange. The stock has more than doubled in the last year.
(Reporting by Supantha Mukherjee and Chandni Doulatramani in Bangalore; Editing by Supriya Kurane)
This news article is brought to you by CELEBRITY GOSSIP NEWS - where latest news are our top priority.
HP's shares hit 9-year low as 2013 outlook disappoints
SAN FRANCISCO (Reuters) - Hewlett-Packard Co's shares plunged to a nine-year low on Wednesday after Chief Executive Meg Whitman warned of an unexpectedly steep earnings slide in 2013, with revenue set to fall in every business division except software.
Wall Street had hoped for quicker signs of progress on Whitman's turnaround plan, which centers on transforming the former industry powerhouse into an enterprise computing corporation.
But Whitman, who took the helm of HP just over a year ago, told investors at an annual HP presentation that the company's recovery will start to become visible only in fiscal 2014, when investments begin to pay off.
She blamed unprecedented executive turnover in past years for dragging out the Silicon Valley company's turnaround.
'The big disappointment is stemming from the fact that things are expected to get worse' in fiscal 2013, RBC Capital Markets analyst Amit Daryanani wrote.
'The company intends to revert back to being a growth story. However, in the near term, earnings will get more challenging before they get better.'
Shares in HP, the largest U.S. technology company by sales, dived as much as 11 percent, marking the biggest single-day decline since August 2011.
HP gave a particularly gloomy outlook for enterprise services, which provides services to corporations and is one of the company's the largest divisions and a key component of Whitman's rescue plan.
Revenue from enterprise services will dive 11 to 13 percent in fiscal 2013 and be barely profitable, with operating margins of 0 to 3 percent, HP said.
Whitman, who became HP's third CEO in as many years after taking the helm from an abruptly dismissed Leo Apotheker just over one year ago, is trying to revitalize the former industry icon via layoffs, cost cutting, and expansion into areas with longer-term potential such as enterprise computing services.
The company has lost almost two-thirds its value since 2010, squeezed by crumbling demand for personal computers in a mobile era and significant leadership turbulence. Its market value now stands just over $30 billion.
Longer term, 'we expect to be a GDP-like growth company with key pockets of higher growth,' Cathie Lesjak, HP's chief financial officer, said.
MUSICAL CHAIRS
HP has been through years of turbulence. Apotheker's 11-month tenure was marked by an acceleration of departures from various divisions, such as networking chief Marius Haas, as he brought in former coworkers from SAP AG.
Apotheker's predecessor, Mark Hurd, who is now president of Oracle Corp, also departed abruptly, after a sexual harassment scandal.
'My belief is that the single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues,' Whitman told the investor conference in San Francisco.
'This is important because as a result it is going to take longer to right this ship than any of us would like,' she added.
HP, like rival Dell Inc, is trying to transform itself into a major enterprise computing provider in the mold of IBM Corp, while slashing expenses to boost the bottom line.
Shares of Dell, the No. 2 U.S. PC maker after HP, fell 4.7 percent and were mired near nine-year lows on Wednesday.
HP is laying off 29,000 employees over the next two years and has written off $10.8 billion mostly related to the writedown of its EDS services business. Meantime, its business continues to be hit by a slowing in corporate spending and personal computer demand worldwide.
For 2013, the company forecast overall earnings, excluding restructuring charges and other items, at between $3.40 to $3.60 a share in fiscal 2013. That's well below the average forecast by Wall Street analyst of $4.18, according to Thomson Reuters I/B/E/S.
Whitman vowed to reduce the number of product offerings and to cut costs as HP tries to recover in a worsening macro-economic environment. She has said it will take five years for the turnaround to be effective.
'All of this is fixable but it is going to take some time,' she said.
HP's stock was down 11.3 percent at $15.20 in afternoon trading.
(Reporting By Poornima Gupta and Edwin Chan; Editing by Tim Dobbyn, Andrew Hay and Leslie Adler)
Wall Street had hoped for quicker signs of progress on Whitman's turnaround plan, which centers on transforming the former industry powerhouse into an enterprise computing corporation.
But Whitman, who took the helm of HP just over a year ago, told investors at an annual HP presentation that the company's recovery will start to become visible only in fiscal 2014, when investments begin to pay off.
She blamed unprecedented executive turnover in past years for dragging out the Silicon Valley company's turnaround.
'The big disappointment is stemming from the fact that things are expected to get worse' in fiscal 2013, RBC Capital Markets analyst Amit Daryanani wrote.
'The company intends to revert back to being a growth story. However, in the near term, earnings will get more challenging before they get better.'
Shares in HP, the largest U.S. technology company by sales, dived as much as 11 percent, marking the biggest single-day decline since August 2011.
HP gave a particularly gloomy outlook for enterprise services, which provides services to corporations and is one of the company's the largest divisions and a key component of Whitman's rescue plan.
Revenue from enterprise services will dive 11 to 13 percent in fiscal 2013 and be barely profitable, with operating margins of 0 to 3 percent, HP said.
Whitman, who became HP's third CEO in as many years after taking the helm from an abruptly dismissed Leo Apotheker just over one year ago, is trying to revitalize the former industry icon via layoffs, cost cutting, and expansion into areas with longer-term potential such as enterprise computing services.
The company has lost almost two-thirds its value since 2010, squeezed by crumbling demand for personal computers in a mobile era and significant leadership turbulence. Its market value now stands just over $30 billion.
Longer term, 'we expect to be a GDP-like growth company with key pockets of higher growth,' Cathie Lesjak, HP's chief financial officer, said.
MUSICAL CHAIRS
HP has been through years of turbulence. Apotheker's 11-month tenure was marked by an acceleration of departures from various divisions, such as networking chief Marius Haas, as he brought in former coworkers from SAP AG.
Apotheker's predecessor, Mark Hurd, who is now president of Oracle Corp, also departed abruptly, after a sexual harassment scandal.
'My belief is that the single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues,' Whitman told the investor conference in San Francisco.
'This is important because as a result it is going to take longer to right this ship than any of us would like,' she added.
HP, like rival Dell Inc, is trying to transform itself into a major enterprise computing provider in the mold of IBM Corp, while slashing expenses to boost the bottom line.
Shares of Dell, the No. 2 U.S. PC maker after HP, fell 4.7 percent and were mired near nine-year lows on Wednesday.
HP is laying off 29,000 employees over the next two years and has written off $10.8 billion mostly related to the writedown of its EDS services business. Meantime, its business continues to be hit by a slowing in corporate spending and personal computer demand worldwide.
For 2013, the company forecast overall earnings, excluding restructuring charges and other items, at between $3.40 to $3.60 a share in fiscal 2013. That's well below the average forecast by Wall Street analyst of $4.18, according to Thomson Reuters I/B/E/S.
Whitman vowed to reduce the number of product offerings and to cut costs as HP tries to recover in a worsening macro-economic environment. She has said it will take five years for the turnaround to be effective.
'All of this is fixable but it is going to take some time,' she said.
HP's stock was down 11.3 percent at $15.20 in afternoon trading.
(Reporting By Poornima Gupta and Edwin Chan; Editing by Tim Dobbyn, Andrew Hay and Leslie Adler)
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