Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Nexon... When Saving Money Is Not in Investor Interests, Only Management's

Equity Bottom-Up

<p>the company's overall performance in 2016 wasn't really bad. If we factor in strong yen and Gloops' impairment loss, we can safely say that Nexon has achieved modest growth in sales and operating profits (+17% YoY and +27% YoY, respectively on a constant currency basis). I admit that this is a very solid performance, especially considering Founder Kim Jung-ju's bribery scandal and Sudden Attack 2's disastrous result. But as for the company's mobile segment, which is undoubtedly the most critical growth engine not only for Nexon but also most game companies, growth rate is quite disappointing. I'm disappointed not only by sales figures but also by the lack of steady selling mobile games. I think the fundamental problem for Nexon's mobile game business may be the lack of steady sellers, and this is mainly because of Nexon's low employee morale, which seems to be a perennial problem.</p>

the company's overall performance in 2016 wasn't really bad. If we factor in strong yen and Gloops' impairment loss, we can safely say that Nexon has achieved modest growth in sales and operating profits (+17% YoY and +27% YoY, respectively on a constant currency basis). I admit that this is a very solid performance, especially considering Founder Kim Jung-ju's bribery scandal and Sudden Attack 2's disastrous result. But as for the company's mobile segment, which is undoubtedly the most critical growth engine not only for Nexon but also most game companies, growth rate is quite disappointing. I'm disappointed not only by sales figures but also by the lack of steady selling mobile games. I think the fundamental problem for Nexon's mobile game business may be the lack of steady sellers, and this is mainly because of Nexon's low employee morale, which seems to be a perennial problem.

Nexon's Unimpressive Mobile Business - Real Problem Is Low Morale Among Its Game Developers