|Bid||64.05 x 0|
|Ask||64.95 x 0|
|Day's range||63.92 - 63.92|
|52-week range||47.05 - 65.39|
|Beta (5Y monthly)||N/A|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg) -- Tencent Holdings Ltd. is in advanced talks to take Chinese gaming firm Leyou Technologies Holdings Ltd. private, edging out other potential suitors including Sony Corp. in a battle for the Hong Kong-listed company.Tencent Mobility Ltd., a wholly-owned unit of the Chinese tech giant, has entered into an exclusive agreement with Leyou for a potential privatization, Leyou said in an exchange filing on Friday. That confirmed an earlier Bloomberg News report.Leyou didn’t provide any financial details in the statement and said there’s no certainty an agreement will be reached. The exclusive agreement is valid for three months, it said.Trading in Leyou, which has a market value of about $1.1 billion, will resume on July 13.Leyou’s controlling shareholder Charles Yuk had been in talks with Tencent-backed iDreamSky Technology Holdings Ltd. for a majority stake sale since late last year. In May, Leyou confirmed it received another non-binding offer from Zhejiang Century Huatong Group Co., a Shenzhen-listed gaming firm that also counts Tencent as a shareholder.Tencent’s offer could resolve what had been an escalating contest for Leyou, with Sony considering joining the bidding, Bloomberg News reported earlier this month.Century Huatong said on Friday, before Leyou’s announcement, that it had ended the takeover talks with the gaming firm.(Updates throughout with Leyou’s statement)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sony Corp. invested $250 million in Epic Games Inc., owner of the popular video game Fortnite and the widely used Unreal Engine for game development.The PlayStation maker and Fortnite proprietor didn’t disclose the new value of the games company. Bloomberg News first reported last month that Epic was close to securing funding at a valuation of about $17 billion.The Unreal Engine is used to create many popular game franchises, such as Borderlands and Gears of War, along with Epic’s own Fortnite. The fifth iteration, Unreal Engine 5, made its debut this summer and was demonstrated on PlayStation 5 hardware, signaling the close collaboration between Epic and Sony.Sony is preparing for the introduction later this year of the PlayStation 5, its first major game console release since 2013. Epic is primarily focused on games, but Tim Sweeney, its chief executive officer, said in a statement Thursday that he shares a vision with Sony of a “convergence of gaming, film and music.”Sony’s shares were up as much as 3.2% in Tokyo on Friday, approaching a 19-year high for the company.“Tim Sweeney has a track record of being able to sense which way the wind is blowing in gaming and he is tipping his hand that it’s blowing Sony’s way,” according to Mio Kato, an analyst at LightStream Research. The Unreal Engine is also used in the making of the Netflix Inc. series “The Mandalorian,” so it “blends nicely” with Sony’s interests in TV and movie production as well as gaming, Kato wrote in a note on Smartkarma.Fortnite has been an influential force in games and culture over the last few years. The game had more than 350 million players as of April, benefiting from the influx of people spending more time at home during the coronavirus pandemic. Quarantine has also been a boon for Houseparty, another Epic property, which allows people to chat over video and play games with their friends. Some 50 million users signed up to use the app in March and April.Read more: Fortnite, Rappers and the Billion-Dollar Pandemic Gaming Boom(Updates with Sony share price and Unreal Engine details from third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- South Korean e-commerce giant Coupang Corp. is buying the software of Hooq Digital Ltd., the Southeast Asian video streaming service owned by Singtel, Sony and Warner Bros that’s filed for liquidation, according to people familiar with the deal.Coupang has already struck a deal to acquire the assets, the people said, asking not to be named because the information hasn’t been announced.The deal ushers SoftBank-backed Coupang into a competitive but fragmented video streaming arena and pits it against the likes of Amazon.com Inc. and Netflix Inc. U.S. giants have emerged as frontrunners, squeezing out a number of domestic players with splashier local programming and fuller Hollywood slates. In a sign of accelerating consolidation, Tencent Holdings Ltd. recently agreed to buy the assets of Malaysian streaming platform iFlix Ltd. And last month, ride-hailing giant Gojek won funding from Golden Gate Ventures and other backers for its own video foray.Coupang, backed also by BlackRock Inc. and Sequoia Capital, has designs too on its own home market. Korea in recent years birthed blockbusters that captivated global audiences from “Parasite” to “Train to Busan,” yet Netflix and Alphabet Inc.’s Youtube remain dominant local players. South Korea’s government announced a plan last month to nurture five homegrown over-the-top or streaming service providers into global companies, and support their growth by expediting deals and investment in content.A Coupang representative declined to comment.Read more: Tencent Buys Assets of Struggling Streaming Platform IFlixHooq, a joint venture between Singapore Telecommunications Ltd., Sony Pictures Television Inc. and Warner Bros Entertainment Inc., filed for liquidation in March and discontinued service at the end of April. Set up in 2015, it offered movies and drama series across Singapore, the Philippines, Thailand, Indonesia and India, but ran into trouble during the pandemic.Coupang, widely regarded as South Korea’s Amazon, has been aggressively expanding into new businesses such as food delivery and digital payments, mirroring the U.S. giant by broadening its services. The Seoul-based company, founded in 2010 by Chief Executive Officer Bom Kim, was said to be valued at $9 billion in late 2018 and has been eyeing a public listing as early as next year, Bloomberg News reported in January.Buoyed by the growth in subscribers to its delivery service, sales at the startup rose to a record 7.15 trillion won ($5.9 billion) in 2019.Read more: Coupang Grew Revenue 64% in Boost For SoftBank’s Startup Cred(Updates with details on Asian market from the third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Lithium-ion batteries play a central role in the world of technology, powering everything from smartphones to smart cars, and one of the people who helped commercialize them says he has a way to cut mass production costs by 90% and significantly improve their safety.Hideaki Horie, formerly of Nissan Motor Co., founded Tokyo-based APB Corp. in 2018 to make “all-polymer batteries” -- hence the company name. Earlier this year the company received backing from a group of Japanese firms that includes general contractor Obayashi Corp., industrial equipment manufacturer Yokogawa Electric Corp. and carbon fiber maker Teijin Ltd.“The problem with making lithium batteries now is that it’s device manufacturing like semiconductors,” Horie said in an interview. “Our goal is to make it more like steel production.”The making of a cell, every battery’s basic unit, is a complicated process requiring cleanroom conditions -- with airlocks to control moisture, constant air filtering and exacting precision to prevent contamination of highly reactive materials. The setup can be so expensive that a handful of top players like South Korea’s LG Chem Ltd., China’s CATL and Japan’s Panasonic Corp. spend billions of dollars to build a suitable factory.Horie’s innovation is to replace the battery’s basic components -- metal-lined electrodes and liquid electrolytes -- with a resin construction. He says this approach dramatically simplifies and speeds up manufacturing, making it as easy as “buttering toast.” It allows for 10-meter-long battery sheets that can be stacked on top of each other “like seat cushions” to increase capacity, he said. Importantly, the resin-based batteries are also resistant to catching fire when punctured.In March, APB raised 8 billion yen ($74 million), which is tiny by the wider industry’s standards but will be enough to fully equip one factory for mass production slated to start next year. Horie estimates the funds will get his plant in central Japan to 1 gigawatt-hour capacity by 2023.Lithium-ion batteries have come a long way since they were first commercialized almost three decades ago. They last longer, pack more power and cost 85% less than they did 10 years ago, serving as the quiet workhorse driving the growth of smartphones and tablets with ever more powerful internals. But safety remains an issue and batteries have been the cause of fires in everything from Tesla Inc.’s cars to Boeing Co.’s Dreamliner jets and Samsung Electronics Co.’s smartphones.“Just from the standpoint of physics, the lithium-ion battery is the best heater humanity has ever created,” Horie said.In a traditional battery, a puncture can create a surge measuring hundreds of amperes, several times the current of electricity delivered to an average home. Temperatures can then shoot up to 700 degrees Celsius. APB’s battery avoids such cataclysmic conditions by using a so-called bipolar design, doing away with present-day power bottlenecks and allowing the entire surface of the battery to absorb surges.“Because of the many incidents, safety has been at the top of mind in the industry,” said Mitalee Gupta, senior analyst for energy storage at Wood Mackenzie. “This could be a breakthrough for both storage and electric vehicle applications, provided that the company is able to scale up pretty quickly.”But the technology is not without its shortcomings. Polymers are not as conductive as metal and this could significantly impact the battery’s carrying capacity, according to Menahem Anderman, president of California-based Total Battery Consulting Inc. One drawback of the bipolar design is that cells are connected back-to-back in a series, making control of individual ones difficult, Anderman said. He also questioned whether the cost savings will be sufficient to compete with the incumbents.“Capital is not killing the cost of a lithium-ion battery,” Anderman said. “Lithium-ion with liquid electrolyte will remain the main application for another 15 years or more. It’s not perfect and it isn’t cheap, but beyond lithium-ion is a better lithium ion.”Horie acknowledges that APB can’t compete with battery giants who are already benefiting from economies of scale after investing billions. Instead of targeting the “red ocean” of the automotive sector, APB will first focus on stationary batteries used in buildings, offices and power plants.That market will be worth $100 billion by 2025 worldwide, more than five times its size last year, according to estimates by Wood Mackenzie. The U.S. alone -- which together with China will be the main source of increased energy storage demand -- is likely to see a 10-fold increase to $7 billion in the period.Horie, 63, got his start with lithium-ion batteries at their very beginning. In February 1990, early on in his Nissan career, he started the automaker’s nascent research into electric and hybrid vehicles. A few weeks later, Sony Corp. shocked the industry, which was betting on nickel-hydride technology, by announcing plans to commercialize a lithium-ion alternative. Horie says he immediately saw the promise and pushed for the two companies to combine research efforts that same year.By 2000, however, Nissan was giving up on its battery business, having just been rescued by Renault SA. Horie had one shot at convincing his new boss Carlos Ghosn that electric vehicles were worth it. After a 28-minute presentation, a visibly excited Ghosn proclaimed Horie’s work an important investment and green-lit the project. Nissan’s Leaf would go on to become the best-selling EV for a decade.Horie came up with the idea for the all-polymer battery while still at Nissan but wasn’t able to get institutional backing to make it real. In 2012, while doing a teaching stint at the University of Tokyo, he was approached by Sanyo Chemical Industries Ltd., known for its superabsorbent materials used in diapers. Together, the two developed the world’s first battery using a conductive gel polymer. In 2018, Horie founded APB and Sanyo Chemical became one of his early investors.APB has already lined up its first customer, a large Japanese company whose niche and high-value-added products sell mostly overseas, Horie said. He declined to give further details and said APB plans to make the announcement as early as August.“This will be the proof that our batteries can be mass-produced,” Horie said. “Battery makers have become assemblers. We are putting chemistry back into the lead role.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- After six years in Japan, Uber Technologies Inc. is finally coming to Tokyo.Starting Friday, users in the Japanese capital will be able to hail taxis using the Uber app, according to Tom White, who heads the company’s operations in the country. Uber is partnering with three local taxi operators to make 600 cars available primarily in the city’s central business district and the popular areas of Shinagawa, Akihabara and Asakusa.The U.S. company has done things a little differently in the world’s No 3. economy, which has strict regulations covering ride-sharing. The San Francisco-based company has focused on growing its food-delivery business, which now encompasses about 25,000 restaurants in 20 prefectures. For rides, it’s built partnerships with taxi companies in provincial cities, including the popular tourist destinations of Kyoto, Osaka and Hiroshima. In Tokyo, its offering has been limited to black-car hires till now.“We wanted to do it right, having learned lessons in smaller markets,” White said in an interview. “We are in a better position to not just offer a good service to riders, but also to have lasting relationships with taxi companies.”In Tokyo, Uber is partnering with Hinomaru Limousine Co., Tokyo MK Corp. and Ecosystem and is in talks with more operators, White said. The goal is to extend coverage to all of the capital’s central districts by the end of the year. That brings the total number of Japanese cities where the service is available to 12.Despite the regulatory challenges, Japan has only grown in importance for Uber. After years of costly battles, ride-hailing giants have struck deals to stay out of each other’s core markets. In 2016, Uber ceded China to Didi Chuxing in exchange for a stake in its former rival. It pulled out of Russia in a similar manner the following year, and sold its Southeast Asian operations to Grab in 2018. That left few reservoirs of untapped growth.Despite being the second-largest taxi market in the world -- generating some $15 billion in annual revenue -- most locals in Japan still hail a cab by flagging one down in the street. Apps are used for less than 5% of the rides, White said. Others have also spotted the opportunity. Sony Corp., startup Japan Taxi and China’s Didi are among those that have rolled out competing taxi-hailing apps.“We are very much still in the early days,” White said. “There is still tremendous opportunity in this market. And the success of Uber Eats shows that people are open to the brand.”(Corrects size of Japanese market in the penultimate paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- If you’re considering making the switch from cable TV to streaming to save money, I have some bad news for you. YouTube TV, a streaming-video service owned by Google’s parent Alphabet Inc., just raised its monthly subscription fee from an already steep $50 to an even steeper $65. To put that into perspective, the $15 rate hike is more than the price of one whole month of Netflix. Tack on the cost of an internet connection, which is needed to stream, and YouTube TV starts to look like not much more than a glorified cable package. It’s emblematic of a broader industry conundrum: a need to raise prices that are already too high from a consumer’s standpoint, yet not high enough for streaming companies to have any hope of turning a profit. YouTube TV has been a favorite among cord-cutters, in part because it tends to have fewer annoying glitches and more content. But $65 may change even some of their minds, especially with the U.S. economy sputtering. The app is in a category known as skinny bundles, which offer a few dozen live channels over the internet (though they’ve gotten chubbier over time as media giants try to stuff in all the channels they can). There’s been a proliferation of services like it in recent years, and yet none has quite been able to replicate cable affordably with the customization that consumers want. They all lose money, according to analysts, YouTube TV included. Sony’s PlayStation Vue — which was also well-liked by those who used it — shut down earlier this year, saying that it was too expensive to compete given the cost of programming.Sony probably won’t be the last company to give up on the streaming wars. Quibi, the startup created by Hollywood veteran Jeffrey Katzenberg — he was the “K” in DreamWorks SKG (the “S” was Steven Spielberg) — looks to be hanging on by a thread. The 90-day free trials that Quibi offered at its launch begin to expire July 5. Will enough consumers be willing to pay $5 a month for its service? It’s not looking likely.Quibi’s $5 may sound cheap compared to YouTube TV’s $65, but you get what you pay for, and the wide range of prices in the streaming industry is indicative of that. For example, even though Disney+ contains high-quality content from its beloved “Star Wars” and Marvel franchises, the app doesn’t have much else, hence it charges just $7 a month. At $13, Netflix still probably offers the best bang for your buck. YouTube TV did say it’s “working to build new flexible models,” which could signal different tiers of pricing in the future. In a dream world, consumers could just choose from a-la-carte menus, but that’s not in the best interest of programmers and distributors. Both sides have turned to megamergers in the last few years — AT&T-Time Warner, Charter-Time Warner Cable, CBS-Viacom, etc. — to regain negotiating power over one another and to stand a chance of taking on tech giants such as Google. Programmers use their scale to force their entire network portfolios onto streaming apps so that their less-popular ones don’t get left out.YouTube TV’s latest price increase comes on the heels of it adding eight of ViacomCBS Inc.’s top networks to its lineup, including BET, MTV and Nickelodeon, with six more niche ones on the way, including MTV Classic and TeenNick. To be fair, though, each of those is relatively inexpensive. What usually makes TV packages so costly is live sports — and that’s true even with most sports off the air this year due to the Covid-19 pandemic. Walt Disney Co.’s ESPN+ is reportedly raising its fee by $1, to $6 a month.If YouTube TV can get away with its new rate, then Netflix probably has room to raise its own price some. That prospect drove Netflix shares to a new all-time-high closing price of $485.64 on Wednesday, giving it a mind-boggling valuation of 42 times Ebitda. YouTube TV is the closest you’ll get to a traditional cable package, in that it has lots of live-TV channels, including sports, and common add-on options such as HBO and Showtime. But if you want streaming to look like cable, you’ve got to pay cable prices. Not even Google will eat those losses forever. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sony Corp. is weighing a bid for Leyou Technologies Holdings Ltd., people familiar with the matter said, paving the way for an intensified bidding war for the Hong Kong-listed gaming firm.The Japanese tech giant is working with a financial adviser on the potential offer for Leyou, said the people, asking not to be identified because the matter is private. In May, the Chinese gaming firm confirmed it had received a non-binding takeover offer from Shenzhen-listed rival Zhejiang Century Huatong Group Co., after months of buyout talks with other bidders including iDreamSky Technology Holdings Ltd.Shares of Leyou extended their gains to as much as 9.8% after the Bloomberg News report. The stock has risen about 20% this year, giving the company a market value of about $1.1 billion.Leyou’s controlling shareholder Charles Yuk had been in talks with iDreamSky for a majority stake sale since late last year. iDreamSky, which counts Tencent Holdings Ltd. among its investors, had been in discussions with CVC Capital Partners for a joint offer valuing Leyou at about $1.23 billion but the Covid-19 pandemic brought their talks to a stalemate, Bloomberg News reported in April.Sony is hoping that it can edge out other bidders with greater certainty of financing, the people said. Leyou’s Yuk aims to choose a buyer and sign an agreement as soon as this month, the people said.Talks are still ongoing and no final decision has been made, the people said. Other bidders could still emerge, they said. Representatives for Leyou and Sony declined to comment.Leyou was listed in Hong Kong in 2011 and counts among its titles the free shooting games Warframe and Dirty Bomb. It’s also working with Amazon.com Inc. to co-produce a video game based on the popular fantasy series “The Lord of the Rings,” according to its website.Sony has recently been aiming to beef up its content arsenal as the tech giant’s chief executive officer Kenichiro Yoshida believes that would in turn strengthen the value of its branded consumer electronics hardware. That includes PlayStation 5, the new video game console that the company plans to launch at the end of this year.Leyou’s Warframe is already available on PlayStation 4 and the company has said in its latest earnings report that it plans to expand the game to more platforms including the next-generation consoles.(Updates with more background from the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- One of the most anticipated video games is one whose existence has yet to be acknowledged by its publisher, Warner Bros. Interactive Entertainment. It’s a big-budget Harry Potter game that will let players role-play as wizards and roam a vast, open-world re-creation of Hogwarts and its surrounding areas.The long-rumored project is very real, according to two people currently working on it. The game is in development at a Warner Bros.-owned studio, Avalanche Software in Salt Lake City, Utah, and is scheduled for release late next year for platforms including the upcoming Sony Corp. PlayStation 5 and Microsoft Corp. Xbox Series X, said the people, who requested anonymity over fears they would be fired for speaking publicly about an unannounced game.Harry Potter is among the highest-profile projects within Warner Bros. Interactive, along with a Batman game that is in the works. Footage from a very early version of the untitled game began circulating in 2018. That video was authentic, but most of the rumors that have come out since are not, said one of the people working on it. Despite a series of challenges—a global pandemic, a fierce backlash against the franchise’s creator, a possible sale of the Warner Bros. video game publishing business—the game remains on track for next year, the person said.Within the team, though, some anxiety surrounds the work. The studio’s management has not addressed recent comments from the author J.K. Rowling that were widely viewed as transphobic, the people said. The situation made some members of the team uncomfortable and sparked private discussions among staff over the pandemic water cooler, the workplace communication app Slack.Spokespeople for AT&T Inc.’s Warner Bros. Interactive and Rowling declined to comment.Rowling, 54, is a near-inextricable part of the wizardry franchise she conjured more than two decades ago. She continues to play a role in most projects associated with the Harry Potter brand, and the game is no exception. However, one of the people working on the game stressed that Rowling has very little direct involvement.Rowling has courted controversy on Twitter in the past, but this month, she made her most inflammatory comments yet. On June 6, Rowling tweeted criticism of an article that used the phrase “people who menstruate” to differentiate between those who were born women and those who transitioned. Later, the author expanded on her thoughts in an essay on her website, writing that “the ‘inclusive’ language that calls female people ‘menstruators’ and ‘people with vulvas’ strikes many women as dehumanising and demeaning.”The result was that many transgender people felt demeaned, and the comments were denounced by fans and collaborators. Cast members from the Harry Potter series, including Daniel Radcliffe and Emma Watson, said they disagreed with Rowling’s stance, and Warner Bros. responded by touting its “inclusive culture.”Many fans are attempting to reconcile their love of the fantasy series with its author’s beliefs, which they find repugnant. On Reddit, there’s a 6,000-member community dedicated to the yet-to-be-announced Harry Potter game. The usual exchange of rumors and wish lists that takes place there was derailed this month by debate over Rowling’s statements. The forum’s editors posted a declaration that they “firmly stand in disagreement with the opinions stated in those tweets” and that fans should avoid discussing them.The Rowling controversy is likely to diminish some anticipation for the game, said Felicia Grady, managing editor of the popular Harry Potter fan site MuggleNet. “Based on what I’ve seen from fans, I do believe that Rowling’s comments have had some effect on the level of excitement they have for the Harry Potter RPG or other upcoming content,” Grady wrote in an email. “We’ve seen comments from fans who no longer wish to support Rowling or the brand financially.”The potential sale of Warner Bros. Interactive would have an even greater impact on the game’s future, said Matthew Kanterman, an analyst at Bloomberg Intelligence. Pricy projects are the most at risk of cancellation in the event of a sale, he said, “especially something like this that has been in the works for years.” CNBC, which reported two weeks ago on talks to sell the AT&T-owned gaming unit, said a deal wasn’t imminent.Warner Bros. had originally planned to announce the Harry Potter game during a news conference at the trade show E3 in June, according to people familiar with the plans. When E3 was canceled due to the coronavirus pandemic, the publisher’s marketing roadmap shifted.The new plan is to unveil the Batman game in August at a digital event called DC FanDome, and the Harry Potter game will be revealed later, a person with knowledge of the plans said. The person said those plans were made before Rowling’s comments.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Digital-camera pioneer Olympus Corp. will sell off its imaging business, blaming the rise of smartphones for its exit from a business it helped to foster more than two decades ago.The Japanese manufacturer unveiled plans on Wednesday to sell its imaging division to private equity firm Japan Industrial Partners Inc. The camera business had been steadily shrinking over the past decade, making up 5.5% of revenue for the fiscal year that ended in March and posting operating losses for the past three years. Medical equipment such as endoscopes now fill the void, accounting for roughly four-fifths of annual sales.Cost-cutting measures “to cope with the extremely severe digital camera market, due to, amongst others, rapid market shrink caused by the evolution of smartphones” were not sufficient to make the imaging unit profitable, Olympus said. No price was disclosed for the deal, which is set to be closed by the end of September.Olympus has been implementing restructuring measures since U.S. hedge fund ValueAct Capital Management, which owns 5% of the company, added two directors to the board earlier this year. The move was seen as a rare victory for activist investors in a market historically resistant to investor demands.A new company will be created to run the imaging business independently and “as the successor of reputable brands such as OM-D and ZUIKO, will utilize the innovative technology and unique product development capabilities which have been developed within Olympus.” The Tokyo-based company didn’t say whether the Olympus name will continue to appear on any new products.Along with Panasonic Corp., Olympus popularized the Micro Four Thirds format of digital photography, which combines the portability of casual point-and-shoot cameras with the quality of more professional gear. Those devices have, however, been matched in quality and surpassed in convenience over recent years by smartphones with software-assisted imaging systems.Japan Industrial Partners bought Sony Corp.’s vaunted Vaio laptop group six years ago and turned it into Vaio Corp., so it has experience in working to revive languishing consumer tech divisions.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sony Corp. is developing subscription-based services for its semiconductor customers, moving beyond just selling chips and creating a new source of revenue within a $10 billion business.The Tokyo-based tech giant set up a team last year to explore new business models for the group that provides image sensors for everything from Apple Inc. iPhones to Hasselblad V cameras. It leads the global market for smartphone cameras but is vulnerable to device cycles and overly reliant on Apple, Huawei Technologies Co. and a handful of other big brands. The company is now building a more comprehensive offering that includes a software platform to support and augment those sensors, Hideki Somemiya, head of the new initiative, told Bloomberg News in an interview.The goal is to become a provider of solutions to companies that want to use sensors and analytics to optimize their business, offering them not just hardware but also software and support for a fee -- akin to the way Amazon Web Services or Microsoft Corp.’s Azure support businesses’ online needs. Somemiya said the opportunity is especially big outside traditional sensors for photography use, in emerging areas ranging from autonomous driving to factory automation and retail planning.Read more: Sony Can’t Make Image Sensors Fast Enough to Keep Up With Demand“Most of our sensor business today can be explained only by revenues from our five biggest customers, who would buy our latest sensors as we develop,” Somemiya said. “In order to be successful in the solution business, we need to step outside that product-oriented approach.”That means cultivating a service relationship as Sony has done with its PlayStation consumer business, which counts more than 40 million paying PlayStation Plus subscribers. Now that the gaming division is going through an arid patch of hardware sales in anticipation of the next-generation PlayStation 5, that subscriber base is keeping the division steady. Somemiya’s goal, shared by Chief Executive Officer Kenichiro Yoshida, is to bring the company’s semiconductor group to the same level of self-sustaining revenue.“We often get queries from customers about how they can use our exotic products such as polarization sensors, short-wavelength infrared sensors and dynamic vision sensors,” Somemiya said. “So we offer them hands-on support and customized tools.”Sony last month introduced a sensor chip with a built-in artificial intelligence engine, which Somemiya said can “free up hundreds of millions of people” who are currently working on identifying defects on production lines around the globe. The same sensor can also be used to inform retail stocking decisions, making sure products on shelves match what customers want. For those sorts of applications, Sony’s after-sales support is essential, Somemiya said.Read more: Sony, Microsoft Strike Deal on Tiny AI Chip With Huge PotentialCustomer support is currently included in the one-time price of Sony sensors. But Somemiya said Sony would provide the service via separate subscription in the future. Made-by-Sony software tools would initially focus on supporting the company’s own sensors and the coverage may later expand to retain customers even if they decide to switch to non-Sony sensors, he added. Some European automakers are already making use of that arrangement.“What we should get rid of is a rooted principle that everything should be by Sony,” Somemiya said. “We must be flexible in offering the best possible solution to challenges that customers face.”Sony will seek business partnerships and acquisitions to build out its software engineering expertise and offer seamless support anywhere in the world. Somemiya said the sensor unit’s subscription offering is a long-term plan and shouldn’t be expected to become profitable anytime soon, at least not at meaningful scale.A successful solutions business would strengthen the unit’s hardware sales, Somemiya said. His ultimate vision is of selling hardware as part of a solutions package.“Maybe what we can do is you buy a camera system for a multiyear contract of services, and we make sure to upgrade the camera’s sensor to the latest every three years,” he said. “It’s not an easy thing to do, but that’s why it’s a value that we would be able to provide.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Nintendo Co. is retreating from the $77 billion mobile gaming arena after disappointing results deflated once-lofty ambitions, ending a multiyear effort just as the market goes through an unprecedented Covid-era boom.President Shuntaro Furukawa proclaimed two years ago that smartphone games would be a $1 billion business with growth potential, building on his predecessor’s promise that Nintendo would release two to three mobile titles each year. That spurred hopes among investors that the gaming powerhouse could carve out a substantial slice of the market. In May, however, the president adopted a markedly different tune, saying “We are not necessarily looking to continue releasing many new applications for the mobile market.”Nintendo’s shares slid 4% the day after that remark. Close observers might have sensed Nintendo was growing disillusioned with the mobile realm even earlier. Its smartphone games project was born out of necessity to shore up the bottom line amid the Wii U’s failure. Now, riding a surge in Switch popularity and investor confidence, the Kyoto-based company appears to have reassessed the mobile business and narrowed its focus to its own console ecosystem.In the period from February through May, when other studios were posting record earnings alongside Covid-19 lockdowns, Sensor Tower data showed marquee Nintendo titles like Super Mario Run plummeting by double digits. At the same time, Nintendo’s own Animal Crossing: New Horizons had just become the quintessential haven from virus anxiety, powering the Switch console to new heights of popularity and pushing the company’s share price to a twelve-year high last week.Mobile games are expected to make $77.2 billion this year, which would account for half of the overall video game industry’s sales, according to research from Newzoo. But “since the release of Mario Kart Tour in fall 2019, Nintendo’s mobile pipeline is empty,” said Serkan Toto, a mobile games consultant in Tokyo. “In a sense, Nintendo’s enormous success on console reduced the need and the pressure to put resources into mobile.”Most of the top-ranked mobile games adopt a freemium model wherein playing is free but gamers are pushed to spend on upgrades or mighty weapons to advance. That approach is coming under scrutiny with regulators clamping down on exploitative freemium mechanics that force players to pay to win. In Japan especially, gacha -- a lottery system where gamers pay in hopes of scoring rare loot -- invited controversy because of its addictive aspects.Fearing that it would harm the brand equity of its franchises, Nintendo asked its mobile development partners not to force players to spend a lot in games, according to people at those companies, who asked not to be identified as the matter is private. A Nintendo spokesperson declined to comment.Read more: $6,065 Hunt for Blonde Avatar Shows Dark Side of Japan GamingNintendo has tested various revenue models for its smartphone games, including one-time purchases for Super Mario Run and subscriptions for Mario Kart Tour. Both apps have fallen short of market expectations in terms of revenue, according to Kazunori Ito of Morningstar Research.Read more: Nintendo Falls on Dour Forecast Despite Strong Switch SalesFor the current fiscal year ending in March, Nintendo said it would focus on already-released mobile apps and doesn’t foresee revenue from that business rising much. The company earned 51 billion yen from smartphone games and other licensing in fiscal 2019, up just 11% from the year-earlier period and still only half of the way to the objective that its president had once set.Nintendo hasn’t announced what apps it will release next, but the chief of its mobile development partner, DeNA Co. President Isao Moriyasu, has said not to expect new apps from it until near the end of the current fiscal year. That suggests a long wait until Nintendo’s next smartphone game.Ace Research Institute analyst Hideki Yasuda said that, in Japan especially, gacha remains the only lucrative business model in mobile games. But even if Nintendo were willing to go down that path, it would be unsuccessful, he added.“You need an active long-running franchise with hundreds of attractive characters to make a good gacha game and then you’d need to keep adding new characters each month to retain players,” Yasuda said. “Fire Emblem is the only Nintendo franchise capable of doing that.”Read more: Profits Are Peaking for the World’s Most Lucrative Mobile GamesNintendo’s peers offer clues as to why cracking the smartphone market isn’t always straightforward.Square Enix Holdings Co., whose Dragon Quest Walk has grown into a huge hit, has taken another route to maximizing game revenue. The publisher monetizes its franchises by making them popular on high-definition home consoles first and then steering players to smartphone apps and having them spend money there -- not just once, but repeatedly. It has so far released more than a dozen Dragon Quest mobile apps and more than three dozen Final Fantasy games for phones, showing the scale of investment required. Both franchises have legions of characters and by releasing multiple titles from each set of lore, the company prompts players to keep spending to obtain their favorite heroes for each game.Nintendo’s Animal Crossing mobile app saw a 45% uptick in earnings as the Switch game was released, per Sensor Tower’s data, but the company doesn’t find the Square Enix model appealing. Unlike game studios who have to pay a platform fee whether on console or mobile, Nintendo has a strong incentive to focus all gamer spending on its own platform, where it doesn’t have to share revenue. Its goal is to send customers from smartphones to consoles, not the other way around.Sony Corp.’s PlayStation unit has also struggled to penetrate the mobile gaming arena. It has a smartphone division called ForwardWorks Corp., which has released eight games mostly based on inactive PlayStation franchises that have failed to gain traction without cross-promotion.Nintendo’s dimmed enthusiasm for smartphone games is driven not only by disappointing revenues and unsatisfying monetization options but also by the limitations of the platform. The company believes its franchises shine brightest when coupled with designed-by-Nintendo controllers and it’s never been fully comfortable with the touchscreen-only interface of a phone.“New smartphone games will come, but it’s very likely these will be just alibi releases to appease shareholders,” said Toto.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Nintendo Co.’s stock has surged to levels not seen since the height of Wii mania.Shares in the videogame maker climbed as much as 2.7% in Tokyo Thursday, lifting the stock past the 50,000 yen barrier for the first time since September 2008. Shares have in recent days been driven by rising fears of a coronavirus second wave, and were boosted further by the announcement of new Pokemon games for both Switch and mobile.The announcement of the Pokemon games by Nintendo and Pokemon Co., in which Nintendo owns a significant stake, was long overdue. The Nintendo 64 game Pokemon Snap will be getting a sequel on Switch, while a paid expansion was announced for the Switch titles Pokemon Sword and Shield, which have sold more than 17 million copies. Pokemon developers also said they would share news on a further “big project” on June 24.Nintendo’s Switch console-handheld hybrid was a hit product during global lockdowns, sold out in many regions and was buoyed by the surprising success of laid-back social simulator Animal Crossing: New Horizons. With cases reappearing in Beijing and increasing in the U.S., the prospect of more lockdowns has helped boosted the shares out of its two-month plateau.“The stock had been struggling the past two months with demand for stay-at-home stocks dropping as the economy re-opened and the state of emergency in Japan was lifted,” Katsuyuki Fujii, an analyst at Asunaro Investment, said Thursday. “But as fears for the second wave of coronavirus grow, people are taking a second look at those stocks.”Shares hit an all-time high of 73,200 yen in November 2007, when the Wii was the must-have hit product.Investors and gamers alike have been wondering what the company has in store for the rest of the year, with Nintendo’s slate looking remarkably bare. Beyond Pokemon, there are almost no titles in its hit franchises with set release windows -- despite Sony Corp. and Microsoft Corp. both preparing to spend big as they roll out new generations of their PlayStation and Xbox consoles this holiday season.“The shares have remained range-bound due to concerns over the lack of upcoming titles,” Daiwa Securities analyst Takao Suzuki wrote in a note dated June 9 in which he raised his price target to 55,000 yen. “We look for new title announcements and a surge in digital sales, other than those for Animal Crossing: New Horizons.”Sony announced more than 20 new titles when it showed off the PlayStation 5 for the first time last week, while Microsoft showcased more than a dozen Xbox Series X titles in May. At Nintendo’s most recent earnings in May it had no major titles listed for release in the rest of 2020.All eyes will now be on the Kyoto gamemaker to say that it will hold one of its own “Nintendo Direct” online presentations, which has been the company’s favored method of revealing showcase titles in recent years. It has been almost a year since Nintendo held a major one of these announcements in which it unveiled key new titles, with the Mario Kart and Zelda franchises among those due to receive new entries.Beyond this year’s slate, hopes are also high for the company in 2021. JPMorgan analyst Haruka Mori on June 10 raised her price target for Nintendo by 18% to 52,000 yen, saying that the Covid-related demand growth didn’t look temporary. “We believe the Covid-19 pandemic has expanded earnings opportunities for the Nintendo Switch platform beyond one-off special demand,” Mori wrote.Despite a lack of short-term causes for the stock to move, Nintendo has multiple opportunities in the mid-term, Mori said in a note, citing catalysts for 2021 that included a possible new Switch model, a price cut for existing models and advances for its team-up with Tencent Holdings Ltd. in China.(Updates throughout with latest share price and Pokemon information.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Sony has finally unveiled its PlayStation 5, but if it's going to win the next-generation console wars, it'll have to be priced right.
(Bloomberg) -- Sony Corp. unveiled two versions of its upcoming PlayStation 5 game console and an array of new games from the virtual stage Thursday, showcasing its next-generation lineup for the first time ahead of a holiday season showdown against Microsoft Corp.’s Xbox.A new Spider-Man game will be ready for the holidays, alongside the release of the black-and-white home console. Sony will also have a new Gran Turismo racing game, as well as an enhanced version of Take-Two Interactive Software Inc.’s bestselling Grand Theft Auto V for the PlayStation 5 next year.The second variant of the PS5, dubbed the Digital Edition, will eschew the Blu-ray disc drive and offer downloads as the only way to acquire new games. This move could hasten the transition to digital downloads and cut out retailers like Amazon.com Inc., GameStop Corp. and Walmart Inc. The PS5 Digital Edition has a sleeker design and is expected to be cheaper than the standard model, though Sony did not disclose pricing information.Shares of the Japanese entertainment giant fell as much as 3.9% in early Tokyo trading Friday, its biggest intraday fall in more than two months.“It looks like Sony is saying the PS5’s theme color is white,” said Hideki Yasuda, an analyst with Ace Research Institute. “I can’t think of many white, round-edged game consoles that have done well in the past, so I think Sony is taking on a challenge with that design direction.”Sony showed an array of new games from various high-profile franchises, including Resident Evil 8, a remake of the action game Demon’s Souls and a sequel to the popular PlayStation 4 game Horizon Zero Dawn.Expectations are high for the PlayStation 5. Sony’s current system has dominated the video game market for the last seven years, selling more than 110 million units and overshadowing Microsoft’s efforts with the Xbox. Both companies began talking publicly about their next generation of consoles last year. Sony has promised technical improvements that would enable sharper graphics, larger game worlds and reduced load times.Read more: Sony Slides After Warning of 30% Profit Drop in Fiscal YearThe coronavirus pandemic has complicated what is normally a carefully choreographed process for introducing a new game system. Sony had planned to deliver a lecture on the PlayStation 5’s technical capabilities during the Game Developers Conference in March. When that event was called off, the Japanese hardware maker instead streamed an hourlong video presentation hosted by the PlayStation’s lead architect, Mark Cerny.The Electronic Entertainment Expo is typically the premier launch event for the biggest game releases. The conference, known as E3, had been set to take place this week in Los Angeles but was canceled due to the virus. Sony had not planned to participate at E3 but arranged a live streaming event on June 4. That was postponed by a week in the wake of global protests against racial injustice that started in the U.S.On Thursday, Sony introduced several games from independent or smaller developers, in addition to big-budget titles. Highlights included Bugsnax, a cartoon game set on an island full of talking fruits and animals, and an adventure game called Kena: Bridge of Spirits. The new version of Grand Theft Auto Online will be free exclusively to PlayStation 5 owners for three months, said Take-Two, the game’s publisher. It debuts in the second half of 2021.The wide variety of games on display could help broaden the PlayStation 5’s appeal and attract younger audiences like those typically captured by Nintendo Co. “Sony showed us a lot of cartoony games, a shift from the PS4 launch when the reveal was dominated by photorealistic games,” said Ace Research Institute’s Yasuda.Sony will face off against Microsoft this holiday season when they each plan to release new consoles. Sony has been struggling to keep costs down for the PlayStation 5, but it hasn’t yet said what the new product will sell for. Partly due to a high initial price tag, Sony is limiting production of the console for the launch, people familiar with the matter have said.Piers Harding-Rolls, an analyst at Ampere Analysis, anticipates the new consoles will sell for $450 to $499. “Higher pricing is actually predicted to have a minimal impact on adoption at launch,” he said. “Within a certain range — less than $500 — price is not a major factor.” Sony will likely be able to reduce the price of the model without the Blu-ray disc capability, said Serkan Toto, a games consultant who runs a company called Kantan Games Inc.(Updates with market reaction and PS4 sales chart)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Tencent Holdings Ltd., spurned in years past by Japan’s guarded entertainment industry, is rekindling its courtship of the country’s fabled anime and manga houses.The Chinese social media giant has in recent months scooped up slices of two prominent local studios, the brains behind smash hit Nier: Automata and Marvelous Inc. Those outlays are just the start of a spending spree designed to extend Tencent’s foothold in a key creative hub while imbibing Japan’s expertise in console game making and hit franchise creation, according to people familiar with its strategy. The Chinese firm is in negotiations with several other studios on potential investments, they said.Tencent has long regarded Japanese entertainment exports as an area ripe for optimization, where better distribution and marketing strategies can generate vastly greater revenues. Having cut its teeth on multibillion-dollar acquisitions of the likes of Clash of Clans developer Supercell Oy and Fortnite creator Epic Games Inc., the Chinese publishing powerhouse has been repeatedly rebuffed when trying to take over developers and studios in Japan. Its new approach is to spend on becoming a favored partner instead, buying board seats and priority access to new content, said the people, who asked for anonymity because the plans are not public.Tencent’s gaming division declined to comment.Commonly abbreviated to ACG, Japan’s anime, comic book and gaming franchises are already popular in Tencent’s domestic market of China, the world’s biggest mobile gaming arena. They’ve fueled the rise of services like streaming platform Bilibili Inc. and provided the characters for many of the country’s favorite games. But Japanese creators, loath to cede control of their prized assets, have preferred ad hoc licensing deals, leading to bidding wars between publishers like Tencent and TikTok owner ByteDance Ltd., who each have competing Naruto games in China. ByteDance is preparing for a big push into gaming this year and NetEase Inc., the other big games publisher in China, has just announced it’s opening a game-development studio in Tokyo.“Japanese ACGs are world class, while their Chinese counterparts are years behind. Even Tencent cannot cultivate sophisticated IP expertise internally fast enough,” said Tokyo-based games industry analyst Serkan Toto. “It’s all about quick international expansion, access to established ACG properties, and insight into creating top-notch IPs from scratch.”Read more: Ninja Naruto Leads Tencent’s March into China’s $31 Billion Anime MarketTencent’s vision is to help set up Marvel Universe-like multimedia franchises, with a focus on turning celebrated anime and manga comic book heroes and storylines into video games, squeezing the most out of each intellectual property. With its control of WeChat, China’s super-app and go-to messaging platform, the company has a significant advantage in cross-promoting its wares.The Japanese creative scene is rich on potential targets, said Hideki Yasuda of Ace Research Institute. Popular IPs like Neon Genesis Evangelion and Doraemon are recognized in China, but haven’t yet translated into major gaming hits in that country. Games like LovePlus by Konami Holdings Corp., Disgaea by Nippon Ichi Software Inc. and Legend of Heroes by Nihon Falcom Corp. also hold growth potential if properly adapted and distributed in Tencent’s home market.The Shenzhen-based company commands roughly half of China’s $33 billion mobile and PC gaming industry, data from research firm Niko Partners shows. That arena is increasingly dominated by titles built on already-familiar characters and lore, as 73 of the top 100 grossing mobile games last year were based on existing IP, according to Analysys.Tencent approached Tokyo-based Marvelous -- seeking to tap its IP library, console development expertise and connections with other ACG creators -- in April, according to several people with direct knowledge of the matter. Marvelous is known for the Story of Seasons farming simulation and produces theater shows based on hit anime series like Prince of Tennis (which in itself was an adaptation of a successful manga series).The 7 billion yen ($65 million) that Tencent is spending for a 20% stake grants it pole position for licensing Marvelous IP and makes the head of Tencent Japan an external director. Tencent wanted that board presence in order to have an insider’s view of the company’s product pipeline, the people said.“Marvelous covers ACG through and through -- a great target for Tencent,” said Toto. And for Japanese ACG creators, “Tencent is a great, established name to be associated with.”Fighting a tough battle against fiercely competitive domestic rivals, Tencent appears willing to spend extra to secure the rights to popular Japanese franchises, hoping to leverage them into multimedia juggernauts that lock Chinese consumers into its ecosystem and bolster its global ambitions.Equally important for Tencent was Marvelous’ success in developing console games. The Chinese behemoth is virtually absent from that contest, which accounts for 30% of overall game industry revenue according to Newzoo data. With a new generation of consoles from Microsoft Corp. and Sony Corp. on the holiday-season horizon and a budding partnership with Nintendo Co. as the sole distributor of official Switch hardware and software in China, Tencent is evidently interested in having a larger presence on this front.Tencent also made an investment in Bayonetta and Nier: Automata maker PlatinumGames Inc. earlier this year. In February, PlatinumGames co-founder and Chief Executive Officer Kenichi Sato assured fans that the so-called capital alliance with Tencent wouldn’t affect the company’s management, saying “They respect our autonomy as game creators.”The studio, whose work has until now been published by larger partners like Nintendo and Square Enix Holdings Co., had been looking for help to grow and become its own publisher, whereas Tencent saw high potential for its creations in the Chinese and mobile markets. The deal was “a win-win situation,” Sato wrote.Read more: Tencent Game Sales Surge Most in Years in China’s Lockdown“Japan and China have formed a symbiotic relationship for games in recent years with gaming companies from each country learning from each other to succeed in both markets,” said Niko Partners researcher Daniel Ahmad.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- HP Inc. will get to keep all the cash, factories and patents Quanta Storage Inc. was ordered to turn over to satisfy a $439 million antitrust judgment from 2019, a federal appeals court ruled.The Taiwanese disk drive maker was ordered to surrender almost all its assets before its appellate challenge had played out because it failed to post an $85 million bond to prevent early collection of the crippling award. The appellate court did agree to give it more time to comply.“Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company,” a three-judge panel of the Court of Appeals in New Orleans said Friday in a 21-page ruling.Quanta tried repeatedly in April to delay HP’s push to collect on the judgment. It claimed that coronavirus travel and business restrictions in Taiwan and China, where most of its executives and factories are, prevented it from posting the bond while complying with Taiwanese regulations on asset transfers by publicly traded companies. HP said Quanta was using the pandemic as a ploy to dissipate assets that could be used to satisfy the judgment.“It is not apparent from the record that the district court considered the amount of time it would take for Quanta to complete the asset transfer process required by Taiwanese law,” the panel said Friday.‘Cannot Go Unpunished’HP said it was pleased that the panel agreed with the trial judge and jury.“Quanta violated U.S. antitrust laws by conspiring to fix prices,” Alex Roberts, one of HP’s lawyers, said in an email. “That conduct cannot go unpunished. HP took them to task for those violations, and now we look forward to ensuring they comply promptly” with the turnover orders.Quanta said in an exchange filing in Taiwan on Sunday that the company will file a petition for the case to be reheard en banc. It will also discuss with its lawyers the procedure of the U.S. Supreme Court appeal in the case. The impact on the operations is yet to be evaluated, Quanta said.A Houston jury awarded HP $176 million in damages after a price-fixing trial in late 2019. Quanta was the only optical disk drive maker that didn’t settle out of court when HP sued more than a dozen manufacturers over a decade-long conspiracy to rig prices for components used to store and read media and data on DVDs, CDs and Blu-Ray discs. Industry giants including Toshiba Corp., Samsung Electronics, Hitachi-LG and Sony Electronics jointly controlled 90% of the market.Damages TripledAfter the jury tagged Quanta with all of HP’s losses from the racket, U.S. District Judge David Hittner in Houston compounded Quanta’s woes by tripling the damages, as allowed under U.S. antitrust law, subtracting settlement credits HP had already received.On appeal, Quanta argued that the damages were incorrectly calculated at trial because jurors included purchases by HP’s foreign subsidiaries, which Quanta claimed aren’t covered by U.S. antitrust protections. HP said its economic expert excluded purchases by the foreign units, and the appeals court agreed, upholding the money judgment.Quanta, which has surrendered some assets to a court custodian, had sought more time to comply with Taiwanese regulations before turning over the keys to its Asian factories. It had also said it needs to make sure the HP judgment is enforceable under local law before complying with an overseas court order that essentially liquidates the company.It urged the courts to respect international comity and require HP to confirm the judgment in Taiwanese courts -- or risk retaliation by foreign judges who might strip American companies of the protection of U.S. courts in overseas disputes. The appeals court rejected those arguments.The case is Hewlett-Packard Co. v. Quanta Storage Inc., 19-20799, U.S. Court of Appeals for the Fifth Circuit (New Orleans).(Updates with Quanta Storage comment in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- It’s the rise of the robots: Japan’s second-largest company is now a maker of industrial automation systems, highlighting the rising importance of a less visible sector to a nation long associated with consumer-facing brands.Keyence Corp., a maker of machine vision systems and sensors for factories, has jumped 19% this year to become Japan’s second-largest company by market value. At a valuation of over 11 trillion yen ($100 billion), it has overtaken telecommunications giants SoftBank Group Corp., and NTT Docomo Inc., which have jostled for the honor to sit behind Toyota Motor Corp. over most of the past decade.Keyence is famed for its dizzying profitability with an operating profit margin of more than 50%, among the country’s highest. That’s enabled by its “fabless” output model, according to analysts, with production of its array of pressure sensors, barcode readers and laser scanners outsourced to avoid high capital costs.Its industry-leading sales system creates bespoke solutions for clients, and its frequently listed as the highest-paying company in Japan. The surge in its shares has also benefited founder Takemitsu Takizaki, who has overtaken SoftBank’s Masayoshi Son by a good margin to become Japan’s second-richest man.“It’s got everything — high growth, high dividends and a high operating margin,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “It’s the type of long-term stock you want to leave to your kids or your grandkids.”Keyence has more than tripled in market value since early 2016. “We feel the sense of expectation from our shareholders,” said Keyence director Keiichi Kimura when asked to comment on the milestone. “We’ll do our best to live up to those expectations.”The rise has also underscored how important the country’s parts and robot makers have become to the stock market, shown in the weighting of companies that make up the the country’s benchmark Topix index. Japan stocks were once dominated by banks and automakers — but years of zero rates which now dip into negative have hurt the profitability of the former, while the importance of the latter was declining even before the coronavirus sent the industry into reverse gear.The weighting of the Topix’s Electrical Appliance sector, also home to the likes of Sony Corp., Murata Manufacturing Co., and Fanuc Corp., has increased to almost 15%, the highest in about a decade, as the importance of the Banks and Transportation Equipment sectors have declined. The Information and Communication sector, headed by the five listed companies that dominate Japan’s mobile carriers, is the second-most heavily weighted segment.The growing presence of IT shares has also been a feature in the U.S. stock market, with the sector making up the highest proportion of the S&P 500 Index since the dot-com bubble burst. The coronavirus pandemic has amplified a trend for investors to prefer companies that eliminate humans from the process — a trend Keyence benefits from both with its fabless production model, and by enabling companies to automate their own production.“It’s a business model that grows the more factory automation throughout the world progresses,” said Mitsubishi UFJ Morgan Stanley Securities’ Fujito.Founder Takizaki holds about 23% of Keyence’s shares, Bloomberg-compiled data show. For the Topix, which takes the free float of the shares into account in its weightings, those holdings mean Keyence is less heavily weighted than Sony, whose market value trails by comparison. Toyota the biggest company on the index, and even forecasting an 80% drop in profit this year, the automaker remains Japan’s largest business with a market value double that of Keyence.“We like Keyence as it outsources production instead of owning factories, allowing it to focus on R&D,” HSBC analysts including Helen Fang wrote in a May 26 report that initiated coverage of the company with a buy rating. “It also uses a direct-sales model that keeps it close to clients. This strategy means it can better capture market share in a widening array of industries and can focus on high-value client solutions.”While the coronavirus pandemic will depress profits this year, Nomura sees a recovery “to record-high profit levels” the following year and sees a record profit the next, analyst Masayasu Noguchi wrote in a report May 28 raising its target price on the stock.“It’s unclear how long the coronavirus pandemic will continue,” Keyence’s Kimura said. “The global uncertainty is likely to continue and in the midst of that we’ll continue to do what we can.”Factory Automation in Asia May Be First to Recover From PandemicThe notoriously tight-lipped Osaka-based company does not provide earnings guidance in its sparse quarterly disclosure. It’s an outlier in a country where companies are being encouraged to boost their transparency and communication with the market.“They are an efficiency-above-any-other kind of company, so doing extra that doesn’t result in revenue addition is probably less of a priority,” said Bloomberg Intelligence analyst Takeshi Kitaura. “They think generally those following the company are happy when they manage solid earnings and growth.”Yoshiharu Izumi, an analyst at SBI Securities Co., says that Keyence holds talks with shareholders and that reassures investors, and doesn’t view the paucity of disclosure as a problem. “Keyence has overtaken Sony, which is extremely proactive in responding to shareholders,” he said. “When Keyence starts putting energy into disclosure, that might be the time to sell.”(Updates with quotes from Keyence from sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sony Corp. said it’s postponing a virtual news conference for the upcoming PlayStation 5 game console, one of the most high-profile corporate events to be put on hold in deference to protests against police brutality in the U.S.Electronic Arts Inc. also scrapped an event to introduce the Madden NFL 21 game that was set for Monday. Airbnb Inc. said Chief Executive Officer Brian Chesky won’t deliver a planned video message to discuss the home-rental startup’s vision for travel. And Alphabet Inc.’s Google postponed the introduction of its Android 11 mobile operating system previously planned for June 3.Demonstrations against the killing of an unarmed black man, George Floyd, by a white police officer in Minnesota last week have turned violent in cities from New York to Los Angeles. Officials have set curfews in major cities to deter late-night protests and looting. The situation has reopened racial wounds and cast a somber tone in the country.For the PS5 event, which had been scheduled for June 4, Sony said, “We do not feel that right now is a time for celebration, and for now, we want to stand back and allow more important voices to be heard.”Electronic Arts issued a statement with a black background that said: “We stand with our African American/Black community of friends, colleagues and partners.” The company said, “We’ll find another time to talk football with you because this is bigger than a game, bigger than sports and needs all of us to stand together and commit to change.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Buried in a set of little-known data are early signs that the hardware side of the technology sector may be rebounding from the pandemic-driven plunge.Investors generally need to wait until a few weeks after a quarter closes to get a sense of how well (or badly) business has been, or hope that a company will provide an update when the situation changes. Except in Taiwan. A decades-old regulation requires companies there to report sales every month. This information isn’t useful only to investors in locally traded stocks. What’s listed is a broad range of companies that make chips, components, half-assembled modules and final products used in almost every electronics device in the world. The numbers can also provide a snapshot of output in China, where most Taiwanese technology manufacturers have the bulk of production.As early as January, it became obvious that the coronavirus would be a nightmare for tech companies. We now know that Apple Inc. posted a 7.2% drop in March-quarter sales of iPhones and iPads, while its major supplier, Foxconn Technology Group, suffered its biggest dive in revenue for seven years.More interesting is to see what’s been going on since. A look at April sales data from Taiwan enabled me to crunch numbers. What we find is a bounce in revenue that gives some hope for the global sector.Taiwan Semiconductor Manufacturing Co. and Foxconn’s Hon Hai Precision Industry Co. are the most famous names in this data set, because they’re the biggest in their category and have a VIP client list that includes Apple, Qualcomm Inc., Huawei Technologies Co. and Sony Corp. Yet hundreds of others, such as Pegatron Corp., Quanta Computer Inc. and Largan Precision Co., collectively supply most of the industry.By aggregating the data month by month, comparing to a year earlier to smooth out seasonality, and looking at the sub-sectors within tech — defined by the Taiwan Stock Exchange — such as components suppliers, chipmakers, or computer assemblers, we can get an understanding of what was happening just a few weeks ago.Computers and peripherals, which include major PC and server makers Quanta and Compal Electronics Inc., showed the largest rebound, from an 11.9% drop in the January to March period to a 7.9% rise in April. Electronics parts and components, such as circuit-board supplier Compeq Manufacturing Co., turned a mild decline into solid growth, from a 3.1% decline into a 9.1% increase. Other electronics, including Hon Hai, which not only assembles iPhones but servers and networking equipment, went from an 11.8% fall to flat. Chips, headlined by TSMC, remained incredibly strong. Optoelectronics, which is largely displays and camera modules, shows a prolonged decline.One of the key takeaways is the relative strength in corporate-focused hardware, and possible continued weakness in gadgets. Foxconn pointed to this earlier in May, when it told investors that its consumer-devices division, which encompasses iPhones, would fall at least 15%, while enterprise products would climb 10%.There are two important caveats to the data.The first is that they track just Taipei-listed companies, and not some big names like Huawei and Samsung Electronics Co., which also manufacture their own hardware. However, it’s a like-for-like comparison — those companies aren’t included in last year’s data, either — and the broad reach of Taiwan’s tech sector means that even Huawei and Samsung are likely part of its supply chain.A more important note is that this is just for one month. Some of that April uptick is simply catch-up production for time lost at the height of the pandemic. Yet clients wouldn’t place orders if they didn’t feel that there’s end-demand somewhere. Autos and textiles are cutting production and shuttering factories in the knowledge that such a pickup in sales isn’t likely. With global turmoil making companies reticent to give predictions, investors wait in the dark for an update or a quarterly conference call. Even if we don’t know whether this is a true rebound, or merely a dead-cat bounce, at least there’s more timely data available to examine.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sony Corp. is planning a digital event to showcase games for its next-generation PlayStation 5 console that may take place as early as next week, according to people with direct knowledge of the matter.The virtual event could be held June 3, though some people also cautioned that plans have been in flux and that the date may change. Other PlayStation 5 events may follow in the coming weeks and months, and Sony is not expected to reveal every essential detail on the console during its first presentation.Read more: Sony Is Struggling With PlayStation 5 Price Due to Costly PartsA Sony spokesperson declined to comment. The company’s shares were largely unchanged in early Thursday trading in Tokyo.The Japanese tech giant has only let out a trickle of information on the PlayStation 5 so far, which the company says remains on track for release this holiday season despite the Covid-19 pandemic. Chief Executive Officer Kenichiro Yoshida said earlier this month that Sony “will soon be announcing a strong lineup of PS5 games.”June is traditionally highlighted by the biggest games industry conference, E3 in Los Angeles, but that was canceled this year due to the spread of the virus. In response, Sony and many game publishers are refashioning their promotional plans around streamed online presentations.Read more: Sony Is Said to Limit PlayStation 5 Output in Its First YearWhile only a small circle within Sony are privy to the appearance of the PS5 console, the controller has been shared with outside developers and, fearing it wouldn’t be able to control leaks, the company made it public in early April.Fans have been eager to hear about the lineup of video games that will launch alongside the console and later.Microsoft Corp., Sony’s most direct rival in the console wars, has put out regular streams and updates about the upcoming Xbox Series X, which is also planned for release this fall.(Updates with chart and share action in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- DefinedCrowd, an Amazon.com Inc.-backed startup that provides data sets to train artificially intelligent speech programs, is setting its sights on a public listing in the next five years as voice interactions between humans and machines become more common.The Seattle-based company raised $50.5 million in a recent funding round led by existing investors, paving the way for an initial public offering within the next five years, Chief Executive Officer Daniela Braga said in an interview. The company declined to comment on its valuation.“It’s the road to an IPO,” Braga said, adding her company’s ambition is to support the development of AI so that people eventually will “communicate with machines the same way we do with humans.”Founded by Braga in 2015, DefinedCrowd curates voice and text data for clients including BMW AG and Mastercard Inc. to train virtual assistants and customer-service chatbots. The company designs the sets to be diverse and balanced, representing certain dialects or age ranges for audiences most likely to use the systems. Revenue grew 656% last year and is expected to triple this year, Braga said.Once the pandemic subsides, Braga said she expects businesses from a range of industries – including telehealth and education – to build AI personal assistants to better serve customers, something that might require more specific data that incorporates an industry’s vocabulary.Amazon, Apple Inc. and Alphabet Inc.’s Google have come under fire over revelations they used recordings of customers’ interactions with virtual assistants to train their AI systems. A former contractor working on Apple’s Siri transcription project in Ireland last week complained to European privacy authorities over the “massive violation of the privacy of millions of citizens.” The companies said they’ve made changes to provide users with more control over their data.By contrast, DefinedCrowd uses a crowdsourcing platform, Neevo, to generate data from a paid community of more than 290,000 members in 70 countries. Crowd members are asked to complete tasks like recording their voices or transcribing and annotating recordings rather than pulling data from customers who are using voice AI products.Braga said the newly raised funds will help the company expand its products and nearly double the number of employees in 2020. The company current employs around 268 people. Existing investors that participated in the funding round include Evolution Equity Partners, Kibo Ventures, Portugal Ventures, Bynd Venture Capital, EDP Ventures, and Ironfire Ventures as well as new investors Semapa Next and Hermes GPE.Amazon and Sony Corp., which is also an existing investor, didn’t increase their stakes in the latest round, Braga said, adding it was a strategic move not to increase the involvement of other companies as DefinedCrowd moves toward an IPO.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Peter Chou, the man who led HTC Corp. through its most prosperous years as an Android phone maker, is returning to consumer electronics with the unveiling of a new virtual reality headset, platform and company.Called XRSpace, the project has been in the works for three years and its centerpiece is a mobile VR headset equipped with fifth-generation wireless networking and over three hours of battery life. Partnering with Deutsche Telekom AG and Chunghwa Telecom Co., XRSpace is also building the VR platform on which services, games and social activities can be accessed and experienced.Priced at $599, the XRSpace headset has a high cost of entry, but the company envisions bundling it with carriers’ 5G service packages or in other forms for educational institutions. After its home market of Taiwan, it’ll look to expand to the U.S. and Europe, Chou said in an interview with Bloomberg News, with the rest of Asia to follow.Chou’s headset is the latest in a long line of devices like Facebook Inc.’s Oculus Rift, which have tried to bring VR into the mainstream without much success so far. The XRSpace gadget is still months away from store shelves and few have had a chance to test or even view it. But the entrepreneur says he’s already signed up 40 to 50 apps for his VR platform.XRSpace’s ambition is to come up with uses for the 5G networks that carriers are rolling out globally.“5G is coming. It feels like 2002, when we first had 2.5G data networks and the first smartphones like the O2 XDA started coming out,” Chou said. “Today, the smartphone experience of togetherness is primitive” because it fails to capture the full range of human expression. XRSpace’s headset uses cameras to pick up hand gestures and track the wearer’s motions, and it creates a lifelike avatar from a selfie. Chou promised it’ll let users perform real-world actions like shaking hands or shooting a basketball in a natural way.The XRSpace founder quit HTC after the popularity of its smartphones waned, but now he’s hoping VR will help a comeback.To build its virtual world, XRSpace has been designing public and private spaces for users to inhabit and even creating virtual stadiums where sports fans can gather together for a shared viewing of a ballgame. The coronavirus outbreak has triggered an uptick in interest in shared remote experiences, as signaled by rapper Travis Scott’s virtual concert in the game Fortnite and Sony Corp.’s Chief Executive Officer Kenichiro Yoshida expressing interest in streaming live concerts to the company’s PlayStation VR headset.Read more: Fortnite, Rappers and the Billion-Dollar Pandemic Gaming BoomThe pandemic was initially an obstacle for XRSpace, whose launch had been planned for Mobile World Congress in Barcelona in February, one of the first global events to be canceled by the spread of the virus. Chou said that manufacturing was set back by roughly two months because of it, and the XRSpace headset is now expected to launch in the third quarter of this year, starting with Taiwan where the company has the most partnerships lined up.But the upside for XRSpace, according to Head of Content Kurt Liu, is that many more interested parties -- such as educational institutions asking about distance learning and collaboration tools -- have been reaching out. Liu’s team has been working with hundreds of developers since last year and already has more than 40 apps embedded in the platform, he said. Those include games as well as wellness and relaxation applications, for which the company has recruited health care experts with decades of experience.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.