Archive | November, 2011

Apple and Amazon experience strong Black Friday and Cyber Monday

30 Nov

Analyst Gene Munster of Piper Jaffray said on Monday that Apple sold about 15 iPads per hour at Apple Stores on Black Friday, a 68 percent increase from last year. The firm posts observers at Apple’s retail locations to see what is selling. In addition to the sector-leading tablets, Munster said that Apple sold about 10 Mac computers per hour, up 25 percent from last year. While not a scientific survey, Munster said that the holiday sales observations make him confident in his projection that Apple will sell 13.5 million iPads in this quarter, an increase of 84 percent over last year.

Amazon.com, meanwhile, reported Monday that it sold a record number of Kindle e-readers, led by the iPad rival Kindle Fire which has been its best-selling item for the past eight weeks. No exact numbers were released, however. 

G5 Entertainment is off to a great start with its Kindle Fire games with three out of four games being ranked among the top 100 in the Amazon App Store (Mahjong Artifacts even at #21). G5 is working on porting its complete Android line-up to the Kindle Fire as soon as possible, just in time for the Christmas tablet hype. Follow their daily rankings at http://www.g5info.se/spelstatistik_kindle.htm.

Nordic Investor

G5 Entertainment: Well positioned to benefit from tablets hype

24 Nov

I came across an interesting article by Rachel Metz, at AP Technology according to which table computers are set to become this year’s hottest item under the Christmas tree. This certainly bodes well for the likes of Apple and Amazon but also for mobile gaming developers like Glu Mobile and G5 Entertainment. The latter is currently ramping up its line-up ahead of the important X-mas season and puts a serious effort into releasing its games for Amazon’s recently launched “Kindle Fire”. This morning, the company launched “Supermarket Mania” and announced the soon-to-come release of its bestseller “Virtual City” for the Kindle Fire.  Experts seem certain that rather than cannibalizing Ipad sales, the Kindle Fire is addressing a more price conscious customer group, thereby making tables even more popular and widespread. The conclusion seems obvious: more tablets –> more demand for apps –> happy days for app developers!

 ”‘Tis the season of the tablet. Despite the gloomy economy, shoppers are expected to shell out for tablet computers this December, making them about as popular as candy canes and twinkling lights. The glossy-screened gadgets are the most-desired electronic devices this holiday season. And, of all the gifts people are craving, tablets are second only to clothing, according to the Consumer Electronics Association. The industry group expects U.S. consumers to spend an average of $246 on electronic gifts, including tablets.

With help from his three siblings, Bob Cardina, 26, plans to purchase an iPad for his parents for Christmas. Cardina and his sister live in Washington. His parents live in Tampa, Florida. So he’s excited to be able to video chat with his parents — them on the new iPad, him on his iPhone. He thinks his mother will be especially happy with the gift. One of her friends has an iPad and she’s “definitely taken a liking to it,” he said. To be sure, tablets were on some wish lists last year, but they were mostly prized by gadget geeks. In the past year, they have become more mainstream. Consumers have become comfortable using touch screens, especially as smartphones continue to proliferate. Tablets are popping up in unexpected places, too. Apple Inc.’s iPad in particular is being used as a learning tool in schools, a digital cash register in shops and a menu at restaurants. In 2010, people were “trying to figure out what the whole tablet thing was about,” says Gartner analyst Carolina Milanesi. “Now, people know what to do with a tablet.”

For some people, the device has become indispensable for playing and working. While you can surf the Web, send emails and watch movies on a laptop or smartphone, consumers are gravitating to tablets because they can be more convenient. The iPad is still expected to far outsell other tablets this year. According to Gartner Inc., nearly 64 million tablets will be sold worldwide by the end of the year. Some 73 percent of them will be iPads. By Gartner’s estimate, Apple will sell 47 million iPads this year — a figure it could certainly achieve, given that it sold 25 million of them by the end of September.

But while many think of the iPad as synonymous with the word “tablet,” plenty of shoppers will be looking for a more affordable tablet to give this year. Two of the most promising competitors come from online retailer Amazon.com Inc. and book seller Barnes & Noble Inc. The companies, major players in the e-reader market, recently released tablets of their own that undercut the iPad’s $499 base price: Amazon’s Kindle Fire, which costs $199, and Barnes & Noble’s Nook Tablet, which costs $249. The Fire, which uses a heavily modified version of Google Inc.’s Android tablet software, is expected to be particularly popular with gift givers in part because of its low price. “When you get below $200, sales go up dramatically,” says technology analyst Rob Enderle. Enderle thinks the Fire will be a popular gift, especially for kids. To him, it seems sturdier than the iPad with a display built from scratch- and crack-resistant Gorilla Glass, and it’s cheap enough that parents won’t be upset if a child manages to break it.

Tom Mainelli, an analyst at research group IDC, expects the Fire and Nook Tablet to take the second- and third-place spots, respectively, behind the iPad during the last three months of the year. Rather than hurting Apple, he believes the success of newer tablets will help grow the entire tablet market. “I don’t think Apple loses just because Amazon wins,” he says. One of these Kindle Fire buyers is 24-year-old Ximena Beltran Quan Kiu, who purchased the device for her mother as a Christmas gift. Beltran Quan Kiu says her mom bought a Samsung Galaxy Tab for herself about a month ago, but didn’t like it and returned it. She’s hoping her mom warms up to the Fire, though, which she can use for reading, surfing the Web and watching movies. To help make sure her mom likes it, Beltran Quan Kiu is also giving a year’s membership to Amazon’s express shipping program, Amazon Prime, which includes free streaming of more than 10,000 movies and TV shows and the ability to borrow certain books from Amazon’s Kindle Owners’ Lending Library. “It might not be the iPad, but it can hold its own against the iPad,” she says.”

Nordic Investor

G5 Entertainment: CEO comments

18 Nov

Recently, there have been some discussions in the market about the legitimacy of G5 Entertainment’s accounting methods. While the intentions of certain discussions can be sometimes questionable, we do believe that it is always healthy to scrutinize a company and to try to understand it as good as possible. Therefore, we took these concerns serious and wanted to get management’s take on things. In our opinion, G5 Entertainment’s management is nothing but very professional and ahead of the curve. CEO Vlad Suglobov has been leading the company for several years now and managed to transform their strategy. As a major shareholder of G5 Entertainment (Mr Suglobov holds almost 10% of the capital) we are convinced that his interests are very much aligned with the average private shareholder’s. 

G5 Entertainment’s CEO Vlad Suglobov comments:

“To start with, we have proven that G5’s game publishing business model is a cash generator when the portfolio of games is big enough. In Q4 2010, G5 has generated positive cash flow of 2.6 MKr on revenue of 8 MKr, in Q1 2011 – 3 MKr on revenue of 9.5 MKr. G5 can easily manage its cash flow. More investment brings more growth in the near future, but puts pressure on cash flow in short term. Less investment means more cash immediately but reduces expected growth. This cash flow/investment balance happening within G5 is important for shareholders to understand. And we believe that capitalizing development costs and depreciating them over 2 years term is the best way to provide the correct picture of our business to the shareholders, because it shows the amount of investment in new games being undertaken in the company.

 When we are buying a computer for our engineers to use, we are not writing off the costs of acquiring this computer immediately, but depreciate it gradually over a period of time. If we did write off computers immediately, we would give shareholders an incorrect picture of the company. The company would own computers worth certain amount of money, while they won’t be on the balance sheet of the company, and the cost of computers would be treated as a loss. All while the company would continue to own computers that maintain certain resell value. Not showing this value would be misleading. Capitalizing the cost of purchasing computers allows us to show that the company owns such assets.

Similarly, games on our balance sheet have real value. I can think of at least several companies that would be interested in acquiring these games in development stage, even more so when games are complete, and even after these games were published – because of the recurring revenue stream that can continue for years on the growing market. Not surprisingly, G5 itself is very interested in selling these games and making a nice profit. It is important that we show this value on the balance of the company, because otherwise we would be treating investment in new products as an expense, and a loss – and this would be misleading.

 Mathematically, for the end result, there’s no difference if we depreciate the development costs immediately or in 2 years. There is certain amount of revenue to be made by the game in 2 years, and a certain amount of costs to produce the game. The net result for any game over 2 years is going to be the same, no matter if we capitalize costs or we don’t, if we write the costs off the moment the game is published, or gradually in the next 2 years. If we were to write off all investment in new games we made during 2010, our 2010 earnings would be lower, but our 2011 earnings would be higher, because in 2011 we would have less depreciation of capitalized development costs from 2010.Similarly, if we write off all capitalized development costs right now, next year 2012 will get a boost in profit because there will be no expense against the revenue from games that we now develop. So it doesn’t matter if we write it off right now or in 2012 – the total result is going to be the same.

 Capitalization of development costs allows us to show shareholders the dynamics of the investment in the company. By looking at capitalized development costs dynamics, one can tell if we are increasing the investment, maintaining the same level of investment, or cashing out while reducing the investment. When a manufacturing company invests in a new factory, does it capitalize expenses? It does. Can investment turn into a loss? Yes it can. Still, it makes sense to do it. It makes no sense to tell shareholdersthat investment in a plant is a loss as soon as the plant is ready to use. For G5, its games are like factories because with some maintenance costs they produce recurring revenue. And like I mentioned they even have resell value. It is intangible, yes. But there are many valuable intangible assets in the world, including some of the biggest brands and intellectual properties. A factory or a commercial real estate can produce a loss even though they are very tangible.

 In order to judge whether or not the investment is likely to make a profit or a loss, one needs to look at the business model and the track record. As I mentioned in investor presentation in June (Nordic Investor: please find the video of the presentation under “G5 Entertainment” in the menu on top of the page) (and displayed a chart of our revenue distribution among games), G5 does not tend to have games that are hits and games that are flops. Our casual games are very consumable and our users want to play them again and again once they get introduced to them. Our users usually download and buy many of our games, over time. We have games that sell better and games that sell less, but even those games that tend to sell less recoup the expenses and produce a healthy profit. A few months ago, our first game Supermarket Mania celebrated 2 years of its availability on the App Store, and it continues to sell well into the 3rd year. It was brought to Android recently with minimum costs (thanks to our Talisman technology), and now makes money on Android. Recently, few more games passed 2 years line. Stand O’Food, Success Story, and Mahjongg games that we released in the summer of 2009 all continue to make money on iOS, and they are also available on Android now, where Stand O’Food became a hit with over 1.6 million downloads and over 22 thousand user reviews – in only a couple of months. We haven’t had a single game that passed 24 months in sales and would cease to generate revenue for G5, or approach near-zero levels. It’s just not happening because we maintain the pace with new releases, and the underlying market grows quickly.

 When it comes to determining the costs that are put on a balance sheet, the board has a policy in place, and our auditors are of course aware of the fact that we capitalize development costs and they consider the policy reasonable. We can only capitalize direct development costs: the cost of work of programmers, artists, level designers, etc. who directly participate in the development of the game, the product. We do not capitalize any marketing or company management costs. So there is no “air” in the capitalized development costs, there are products that will generate revenue for more than two years, once completed and published. And we keep the budgets of our games reasonable. At the moment, our capitalized development costs represent tens of games. The capitalized development cost amount per game is rather low.

 It can also be good to know that in 2011, the board introduced a cap on the total amount of top management bonus in one year. And as key managers’ interest in the company is significantly higher than their compensation in the company, their interests are aligned with those of the shareholders, and they are perfectly motivated to build for the long term and to create shareholder value. This has been demonstrated over the years the company is listed in Stockholm. Please also note that most of our development staff is located in Kharkov, Ukraine. Our Russian development office has a small staff which is primarily working on our Talisman technology, while the office in Ukraine works on games. And no – we are not connected to Ryska Maffian, but I know from movies like “The Girl with the Dragon Tattoo” about the dangers of living in Stockholm.”

No more questions from my side!

Nordic Investor

G5 Entertainment broadens its game portfolio

17 Nov

Keep ‘em coming!

G5 Entertainment announced today a couple of new games, showing the first fruits of its increased developing efforts over recent months.

Here is today’s press release:

The Mystery of the Crystal Portal, Mahjongg Artifacts and Success Story have been released on Amazon Appstore and are available to purchase and download by Kindle Fire users. The games are developed and published by G5 Entertainment. For more information please visit the games’ homepages at www.g5e.com/games/kindle_games.

Youda Survivor has been released for iPhone and iPad today, on November 17th, 2011. Further information is available at www.g5e.com/games/youda_survivor_iphone, www.g5e.com/games/youda_survivor_ipad. The game is developed and published by G5 Entertainment under license from Youda Games.

Upcoming games:

Supermarket Management will be released on Amazon Appstore on November 24th, 2011. Further information is available at www.g5e.com/games/supermarket_management_kindle. The game is developed and published by G5 Entertainment.

Fix-it-up: World Tour will be released for iPhone and iPad on December 1st, 2011. Further information is available at http://www.g5e.com/games/fix_it_up_2_iphone, http://www.g5e.com/games/fix_it_up_2_ipad. The game is developed and published by G5 Entertainment under license from World-Loom.

G5 Entertainment’s YouTube channel: http://www.youtube.com/g5enter.
G5′s Facebook page: http://www.facebook.com/g5games.
G5′s Twitter page: http://www.twitter.com/g5games.

Nordic Investor

Amazon Kindle Fire launches successfully

16 Nov

One day ahead of schedule, Amazon launched the Kindle Fire, a USD 200 tablet powered by Android. Unlike the iPad, which is a full-featured machine, the Fire is light on firepower, and exists mostly to sell Amazon e-books and Amazon Prime movies. Still, reviewers, for the most part, have been kind – one critic called the device “perhaps the best, tightest integration of digital content acquisition into a mobile device that we’ve yet seen.”

And in a statement, Dave Limp, an Amazon executive in charge of the Kindle line, announced that the Fire is already a hit. “Based on customer response,” Limp wrote in a press release, “we’re building millions more than we’d planned.” But several questions remain, chief among them whether the Fire, which straddles the line between tablet and e-reader, can rack up sales in the long run.

Sarah Rotman Epps, an analyst at Forrester, offered a qualified yes. “Amazon has all the pieces in place to ensure a successful launch for the Fire,” she told CNN, adding that Amazon will likely sell between 3 and 5 million Fire units before the end of the year. For context, consider the following facts: Apple has sold 28 million iPad tablets since the device first hit shelves, in 2010. (In the last quarter alone, Apple unloaded 9.3 million iPads.)

The Barnes and Noble Nook, on the other hand – possibly a more analogous example – launched in the fall of 2009, and racked up sales of 1.43 units in the first quarter of 2010. Rotman Epps has Amazon doubling or even tripling that figure in its first few months on the market. To Rotman Epps, the appeal of the Fire is the appeal of Amazon itself – an easily-accessible platform, used by a large cross-section of consumers.

“Amazon as a company appeals to a wider, more diverse customer base,” she said. “Our studies show a lot of iPad owners live within driving distance of Apple stores – meaning they’re concentrated on the coast. This could be a red state/blue state thing.” Quick translation: Apple is for the coastal elites, the (millions of) high-tech bauble collectors, and Amazon is for everyone.

As mentioned previously, our top-pick G5 Entertainment is preparing the launch of initially 12 games on Amazon Appstore. Once approved and released on Amazon Appstore, G5’s games are going to be available to purchase and download by all Kindle Fire users.

Nordic Investor

G5 Entertainment: continues to deliver

15 Nov

G5 Entertainment’s Q3 2011 report was once again a demonstration of profitable growth and reliability. As expected, management re-iterates its guidance for FY 2011 and its target of an 2012 EPS of SEK 3.20.

Rather than writing a long text about the obvious trends and how great the company is (if you follow our comments you know how it is anyway), I decided to show you some graphs that speak for themselves.

I am long G5 Entertainment and you should be too

Nordic Investor

G5 Entertainment: Entering Amazon Appstore as Kindle Fire is released

10 Nov

G5 Entertainment  announced this morning that it is preparing to initially release 12 games on the Amazon Appstore starting 15th November, when the “Amazon Kindle Fire” starts to go on sale in the USA. 

Amazon’s Kindle Fire is said to include support for several thousand of the most popular Android apps when it launches November 15, including games from the likes of Zynga, EA, Gameloft, PopCap, Rovio and now also G5 Entertainment. Amazon’s USD 199 tablet runs on a modified version of the Android OS that only supports apps offered through the company’s Amazon Android Marketplace, which currently lists over 3,600 games among nearly 20,000 total apps. Current game offerings on that Marketplace include popular titles such as Angry Birds, Plants vs. Zombies, Peggle, Cut the Rope, Doodle Jump, Fruit Ninja, Age of Zombies, Pac-Man, Drift Mania and Jenga. Amazon says it tests all apps in the App Marketplace for compatibility with the Fire, and Fire users will be able to purchase games and apps directly using Amazon’s 1-click technology. Amazon will also continue to offer one paid app as a free offer each day, the company said.

G5 Entertainment: Ahead of Q3 2011 report

8 Nov

On November 15th, it is time for G5 Entertainment to report its Q3 2011 result. As usual, management has already given the market a heads-up with its mid-quarter update statement on October 4th. Therefore, I think we should not be too concerned about the actual Q3 figures. G5′s mid-quarter updates are usually quite accurate and I see no reason why this should be any different this quarter. Consequently, revenue for the period January to September 2011 is likely to be SEK 31.2m while EBIT and EPS are expected to end up around SEK 11m and 1.26 respectively. This forecast corresponds to 112% revenue growth and 88% EBIT growth compared with the same period one year ago.

Also regarding the current guidances regarding full-year 2011 and 2012, I would not expect any major changes. For FY 2011, G5 Entertainment currently guides for revenues of SEK 47m, an EBIT of SEK 16.5m and an EPS of SEK 1.90. For FY 2012, G5 Entertainment’s goal is to reach revenues of SEK 87m, an EBIT of 30m and an EPS of SEK 3.20.

We think it is important to highlight that G5 Entertainment is in an expansion phase. The company tries to exploit the opportunities that the rapidly growing smartphone and tablet markets are offering. This effort is naturally linked to an increased need for investments. This was seen for example in Q2 2011, when cash flow was around a negative SEK 1.2m as G5 boosted its internal development capacity and invested in additional projects and IP rights acquisitions (the Android market was entered in Q2 2011, as an example). Total cash reserves at the end of Q2 2011 amounted to almost SEK 7m so the company has plenty of reserves and as a shareholder I really want to see that they put this money to work and not keep it in the bank account. Neither would I want to see any dividends any time soon. G5 Entertainment is a fast growing company in a fast growing industry. To start distributing cash back to shareholders would be the same as acknowledging that they do not know how to expand any further. I am pretty sure they know quite well!

G5 Entertainment’s management aims to “maintain the balance between having sufficient cash reserves and actively investing for higher growth” going forward. I can easily live with a few more quarters of negative cash flow if it is due to an increased expansion rate.  A good measure for this are the capitalized development costs for their games. G5 Entertainment activates these costs during the quarter they occur, i.e. when the game is developed. The more games developed, the higher the capitalized development costs will be.  The capitalized development costs for the game are then evenly depreciated over 2 years following the day of the commercial release of the game. We know from examples like Supermarket Mania, that the games sell much longer than only 2 years which leads to a nice earnings booster once the game is fully depreciated.

We at Nordic Investor believe that the focus in the report will be on general comments regarding the development of the busines such as download activity on the different platforms, number of developer partnerships etc. Judging from recent download-statistics (check out www.g5info.se for a daily updated overview) G5′s Android business is developing particularly well so we would not be surprised by bullish comments from managment regarding this matter.

If G5 Entertainment was to deliver on its guidance, the share looks extremely cheap. Apparently, insiders think so too as they have increased their holdings in recent weeks.

I am long G5 Entertainment and you should be too.

Nordic Investor

G5 Entertainment: CEO Q&A ahead of Q3 report

6 Nov

Soon it is time for fast growing mobile gaming developer G5 Entertainment to report is Q3 2011 results. On November 15th, we will get an update on how the expansion efforts are proceeding. Nordic Investor has been in touch with G5 Entertainment’s CEO Vlad Suglobov in order to get a heads-up on recent developments. Here are the main take-aways:

Nordic Investor (NI): How much of your revenues is in US-Dollar or US-Dollar related currencies (e.g. RMB)? The SEK has weakened by some 3% when looking at the average SEK/USD rate for Q3 compared with Q2 and the USD has continued to strengthen during Q4 so far. This should be positive for your earnings, shouldn’t it?

Vlad Suglobov (VS): We are still at around the same equal distribution of revenue among US, EU, and Asia and the rest of the world as I announced at investor presentation in June – about 30-35% come from each major region. We are not really following currency fluctuations. With the growth we are experiencing it doesn’t really matter if there 1% or 2% more or less. We prefer to focus on more important things like making sure our games are great. That said, I believe we are well diversified when it comes to currency changes due to revenue spread among regions of the world, so it’s a good thing.

NI: I was happy to see the recent announcement of “Youda Survivor” to be released on November 17th. On a more negative note, I guess this implies that you will not publish any game next week, doesn’t it? Do you still feel comfortable that you will be able to publish 80 games during 2011? Any bottlenecks that have incurred in your development process?

VS: Yes, in this particular case we will not be releasing anything on this particular week. But I wouldn’t say it’s a negative thing. We are obviously busy with something else. Last year’s holiday season and what followed was very successful for us, so we really want to prepare well this year and try to repeat the success we had. Stay tuned for more news. As of 80 games in 2011 — like I mentioned before, our focus has changed a bit, and we are working towards a goal of releasing one game every week. This might take some more time to achieve and have a smooth flow of games, and there may be empty weeks or weeks when there will be more than one game released on different platforms – don’t get scared, it’s all good. We don’t have any particular bottlenecks in the development process, but as you can imagine setting up the development of so many games is a challenging task. We are working on it.

NI: Regarding your co-operation with HipSoft: Can you comment on why HipSoft has decided to break its co-operation with Glu Mobile? Built-a-lot 1 and 2 have been published for iOS by Glu Mobile. Will you publish all the remaining 4 versions of the franchise? Any idea of the approximate time horizon – Q1 or Q2 2012 maybe?

VS: I can’t say on Hipsoft’s behalf but I think G5 has an audience which is much better fit for Hipsoft games than the audience of Glu. So when Hipsoft guys approached us, we were happy to work with them. And yes, we are going to publish games 3, 4, 5, and 6. Regarding the horizon – follow the news.

NI: Following the HipSoft announcement, with how many studios to do you have a partnership at this point? How do you go about finding new cooperation partners? Any plans to start partnerships with Asian studios in order to cater more to the Asia demand?

VS: It’s more studios than before. Like I mentioned in the reports before, we are signing up new partner studios every month. And we definitely know where to find good casual game development studios. We were one of the casual game developers a few years ago, too. These guys know us from before. We don’t have any plans to work with Asian studios or make games specifically tailored for Asian audience. We see that our games are already popular in Asian markets, it doesn’t feel like we really have to do something special for these territories. If a game is good and addictive, it’s good and addictive. One thing about casual games is that they appeal to everyone. That’s as in “everyone”. Asian people included.

NI: Your current guidance for 2012: How many games do you expect to release in order to reach a topline of SEK 87m?

VS: Like I mentioned a few times now, we’re thinking in slightly different terms now. We want to release one game a week on iOS and one game a week on Android. We will get there eventually. This is not about the quantity. This is about being a service to our users and providing them a good game every week. Our average revenue per game in the first months of sales continues to grow. And we are going to work on increasing our revenue per game further. It means better games, better marketing, more platforms and stores, better monetization. We can’t scale up the number of game releases indefinitely, it makes no sense. We know how to increase revenue per game.

NI: Do you feel that you are able to recruit enough qualified developers at this point? Would it be an option to buy a complete development studio in order to increase your capacity?

VS: I feel that we are able to get people as we need to. There is always a feeling we could do even more if we had even more smart people, but there’s always a limit to how fast one can grow without losing control. So we are starting to rely more on work with external studios, it’s a better scalable model. We are going to maintain a certain balance between using in-house developers and using services of external studios. We don’t have plans to buy any studios at the moment.

NI: Your tax rate: How long is it sustainable to pay a tax rate of less than 15%? Is there any special set up that enables you to pay lower taxes? What would you consider to be a reasonable long-term tax rate for G5?

VS: Virtually all our operations are outside Sweden. Our tax rate is a combination of tax rates of different territories where we have operations, and it works out this way on average. It is sustainable as long as we’re not changing our structure much. It might go up and down a bit depending on how much profit which subsidiary makes in their particular corporate tax rate zone, but overall I’d expect it to stay the same.

NI: How are the plans proceeding regarding your change of listing? Should we expect a change rather in H1 2012 or H2 2012?

VS: I think it’s a bit too early to consider or discuss this given the condition of financial markets.

Conclusion: We feel it is very comforting to see an upbeat CEO Suglobov. G5 Entertainment’s operational development seems to continue as planned and we are optimistic that the company will deliver on its guidance. We do, however, argue that G5 Entertainment would be well-advised  to change listing sooner rather than later if it wants to increase shareholder value. A move to NasdaqOMX’s Small-cap list would add further credibility to the case and institutional micro-cap funds could start to consider investments in the company. “Aktietorget” is a great option for start-ups and companies at an early stage of their development, but its reputation as a stock exchange is “mixed” at best. This is also partly an explanation why G5 Entertainment’s share is trading at an extremely low valuation. I am convinced that owner “Traction” is well aware of this issue and will push for such a move as well. Either way, it will not be sustainable in the long-run that the G5 share is trading at a 12m forward PE-ration of 6.7x.

I am long G5 Entertainment and you should be too.

Nordic Investor

Glu Mobile: Highlights from Q3 2011 conference call

4 Nov

There were a couple of things I would like to highlight from yesterday’s Glu Mobile Q3 2011 conference call due to their general implications for the mobile gaming industry and our top-pick G5 Entertainment.

Question: On Android, can you talk a little bit about monetization of Android and how that compares with monetization on iOS?

Glu Mobile CEO, Niccolo de Masi:  Some of the principal differences of core are that incented advertising is all alive and well on Android, whereas there are limitations to it on iOS. Google is in the process of adding carrier billing to Google Checkout globally. And so you will see an expansion of really reduced friction on the Google Checkout I think over the next year. And that’s only, only good news for us. I think it’s fair to say that the average consumer on iOS is still out indexing the average consumer on Android. However, that gap is closing. I think 6, 12 months ago, you saw that it would take many more users on Android to make same dollar amount of revenue as it in iOS. But this gap is narrowing to a factor of two or less as the Android marketplace continues to mature and continues to innovate frankly in what it allows on the advertising side.

Q: On your pipeline slate for Q4: Can you talk about the rationale behind picking this launch window in mid to early December versus picking the date where you could capture some of the holiday sales of phones?

CEO: Actually what happens, is a lot of people upgrade their handsets literally between Christmas and New Year, it’s a popular business present. So if you think about the timing when some will actually look to fill their devices with new content, it tends to be after Christmas because you tend to start downloading, so they actually think it’s pretty proven to be a successful strategy to aimed have titles live, call at mid-December onwards, and if you look at Gun Bros last year and our Q4 2010 in Q1’11 results you’ll see good amount of that bearing out actually historically.

Q:  I wonder, if you talk a little bit about the new Nokia and Windows Mobile platforms coming out, and kind of how you are thinking about those for next year in particular?

CEO: Sure, we were a launch partner with Windows Phone 7, I think we had three of the first 10 games that were live earlier this year, actually late last year. So Glu has been predict just supporter of any offering system restore front or any handset which we believe will have long-term global success. That’s why we were there for Amazon to the start, that’s why we were there actually Windows Phone 7 and Windows Phone 6 for that matter. We’re extremely bullish on the long-term prospects of actually Windows phone 8, they’re moving the developing language away from C sharp, which is what harmonized Windows phone7 with X Play. But Windows Phone 8 using C++, which means that is lot easier for developer like us, it’s already building for iPhone and Android, decoder for Windows phone 8. So all signs are that on the head to head basis, the ecosystem that Microsoft is building, is interesting in compiling for a lot of uses. It’s going to build the head of the enterprise market with the office compatibility, it can build a head up, head up gamer market with, X Play and Xbox connection in ecosystem Erratic. And so really comes down to how quickly you think that you’re going to ship devices, Nokia has 1,2,3 devices, they’re trying to get out just in time for Christmas, forecast for 2012 I think it certainly, it going to be nowhere near IOS and Android, but in the 2012, but as we’ve said on previous calls, we do think to Windows Phone 8, Windows phone 7, Nokia alliance stands a very good chance of being the strongest most viable third-party platform or third-place platform rather after IOS and Android.

Source of the Glu Mobile Q3 2011 conference call transcript is www.SeekingAlpha.com.

 

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